In re Danastorg

• Decision Date: 16 September 2013
• Docket Number: No. 13–13006–JNF.,13–13006–JNF.
• Citation: 499 B.R. 8
• Parties: In re Reba DANASTORG, Debtor.
• Court: U.S. Bankruptcy Court — District of Massachusetts

499 B.R. 8

In re Reba DANASTORG, Debtor.

No. 13–13006–JNF.

United States Bankruptcy Court,

D. Massachusetts.

Sept. 16, 2013.

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

David G. Baker, Boston, MA, for Debtor.

MEMORANDUM

JOAN N. FEENEY, Bankruptcy Judge.

I. INTRODUCTION

The matter before the Court is the Motion for Relief from Automatic Stay (the “Motion”) filed by U.S. Bank National Association as Indenture Trustee of Castle Peak 2011–Loan Trust Mortgage Backed Note, Series 2011–1 (“US Bank”), seeking relief from the automatic stay to proceed to exercise its rights pursuant to applicable federal and state law, including a summary process proceeding, as to real property located at 3 Whiting Lane, Unit 3, Building F, Hingham, Massachusetts (the “Property”). In its Motion, U.S. Bank avers that it is the owner of the Property by virtue of a foreclosure deed dated March 27, 2013 and recorded on April 2, 2013 and seeks relief from stay “for cause” pursuant to 11 U.S.C. § 362(d)(1).

The Debtor filed an Objection to the Motion in which she states, inter alia, that the foreclosure sale conducted by U.S. Bank was wrongful within the meaning of US Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 650–51, 941 N.E.2d 40 (2011), because the foreclosing entity was not the actual mortgagee or the holder of the promissory note at the time of the sale, adding that the decision in Bank of New York v. Bailey, 460 Mass. 327, 951 N.E.2d 331 (2011), ¹ “makes it clear that under Massachusetts law, merely presenting a foreclosure deed is insufficient when, as here, the moving party's title (i.e., it's ‘colorable’ right to possession, within the meaning of Grella v. Salem Five Cent Savings, 42 F.3d 26 (1st Cir.1994)), is challenged.”

On August 7, 2013, the Debtor filed an Emergency Motion for Leave to Supplement Objection to Motion for Relief from Stay together with exhibits. The Debtor in her Emergency Motion stated:

[D]ebtor's counsel realized that the moving party had failed to provide the court with evidence that it was either the original mortgagee or its assignee (or the lawful agent of either). Since that relates to the primary issue presented, the documents provided herewith will tend to show that the moving party was not the original mortgage [sic], its assignee, or the lawful agent of either. With regard to ownership of the Promissory Note, see Eaton v. FNMA, 462 Mass. 569 (2012), the debtor has no information, but notes that the purported foreclosure took place after the Eaton decision, and thus Eaton controls.

The Court conducted a hearing on U.S. Bank's Motion on August 8, 2013 and took the Motion under advisement. On August 12, 2013, the Court entered the following order, observing:

... At the August 8th hearing, a threshold issue arose regarding U.S. Bank's standing to seek relief from the stay to evict the Debtor from the Property due to the provisions of the Mortgage in which the Lender thereunder, WMC Mortgage Corp., is referred to in Section D thereof as the “mortgagee under this Security Instrument” and MERS is referred to in Section C as the nominee for the Lender and “the beneficiary under this Security Instrument” but the Debtor mortgaged, granted and conveyed the Property, with the power of sale, to MERS pursuant to the Section of the Mortgage entitled “Transfer of Rights in the Property.” The Debtor alleges that MERS was not the Mortgagee under the Mortgage and therefore it did not have the capacity to assign the Mortgage and that, as a result, U.S. Bank conducted a wrongful foreclosure on the Property.

The Court ordered the parties to file briefs in support of their respective positions “[i]n light of the threshold legal issue of standing raised by the Debtor,” adding that it would determine the Motion or schedule an evidentiary hearing, if necessary.

The parties complied with the Court's order and filed briefs. US Bank attached to its Memorandum numerous exhibits, including the Condominium Unit Deed pursuant to which the Debtor acquired the Property; the mortgage; four assignments; a Certificate of Authorization, dated March 27, 2013, pursuant to which U.S. Bank ratified that Orlans Moran PLLC was authorized to make entry on the Property, bid on its behalf at the foreclosure auction, and execute necessary affidavits in conjunction with the foreclosure; a Certificate of Appointment, dated March 14, 2013, pursuant to which Orlans Moran, PLLC ratified and confirmed the appointment of Andrew Kadlick as its agent for purpose of foreclosing the mortgage; a Certificate of Entry, dated September 13, 2012; a Foreclosure Deed dated March 27, 2013; an Affidavit of Sale executed by James Southard, Esq. of Orlans Moran, referencing and attaching the mortgagee's notice of sale published on August 23, 2012, August 30, 2012 and September 6, 2012; and a “Post–Foreclosure Affidavit Regarding Note[,] ‘Eaton’ Affidavit[,]” pursuant to which Gina Gray, Vice President of Selene Finance, LP, as servicer for U.S. Bank, certified that as of the dates when the notice of sale relating to the mortgage at issue were mailed and published pursuant to M.G.L. Chapter 244, Section 14 up to and including the Foreclosure Sale Date, the Foreclosing Mortgagee was: ... [t]he holder of the promissory note secured by the above mortgage.” ²

The material facts necessary to determine the Motion are not in dispute. Neither party specifically requested an evidentiary hearing, although the Debtor requested that the Motion be consolidated with her pending adversary proceeding against U.S. Bank.³ The Court now makes the following findings of fact and conclusions of law in accordance with Fed. R. Bankr.P. 7052.

II. FACTS

On or about December 3, 2002, Debtor became acquired the Property pursuant to a Condominium Unit Deed. On or about July 18, 2005, in connection with refinancing the Property, WMC Mortgage Corp. (“WMC”), identified as the Lender on the mortgage, extended a loan to the Debtor in the original principal amount of $476,250. The loan was evidenced by a promissory note executed by Debtor, but a copy of the note was not submitted as an exhibit to any documents filed with the Court in connection with the Motion. The note was secured by a mortgage on the Property executed by Debtor. In the mortgage, Mortgage Electronic Registration Systems, Inc. (“MERS”) was identified as the “beneficiary under this Security Instrument” and described as “acting solely as a nominee for Lender and Lender's successors and assigns,”, i.e., WMC. In addition to being identified as the Lender, WMC also was identified as the “the mortgagee under this Security Instrument.” The mortgage was duly recorded in the PlymouthCounty Registry of Deeds on July 25, 2005.

The mortgage provides in pertinent part the following

This Security Instrument secures to Lender (i) the repayment of the Loan ...; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender's successors and assigns) and to the successors and assigns of MERS with power of sale, the following described property.... which currently has the address of 3 Whiting Lane, Hingham, Massachusetts 02043 ... TOGETHER WITH all the improvements now or hereafter erected on the property.... All of the foregoing is referred to in this Security Instrument as the “Property.” Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right to exercise any or all of those interests, including but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling the Security Instrument.

(emphasis supplied).

On or about August 3, 2009, MERS assigned the “mortgage and the note and claim” to Residential Funding Real Estate Holdings, LLC (“Residential”) by assignment recorded on September 16, 2009 in the Plymouth County Registry of Deeds in Book 37720 at Page 341. On or about August 23, 2010, Residential assigned the mortgage to Residential Funding Company LLC fka Residential Funding Corporation (“Residential 2”) by assignment recorded on December 14, 2010 in the Plymouth County Registry of Deeds in Book 39398 at Page 160. On or about May 4, 2011, Residential 2 assigned the mortgage to CPCA Trust 1 by assignment recorded on May 26, 2011 in the Plymouth County Registry of Deeds in Book 39968 at Page 229. On or about April 4, 2012, CPCA Trust 1 assigned the mortgage to U.S. Bank by assignment recorded on July 12, 2012 in the Plymouth County Registry of Deeds in Book 41637 at Page 11. As a result of Debtor's default under the terms of the note and mortgage for nonpayment, and following statutory notice, U.S. Bank through the firm of Orlans Moran PLLC conducted a foreclosure sale of the Property on September 13, 2012 pursuant to the statutory power of sale in the mortgage. US Bank was the successful bidder at the sale. It recorded a Foreclosure Deed, dated March 14, 2013, on April 2, 2013 in the Plymouth County Registry of Deeds in Book 42884 at Page 158. According to U.S. Bank, on or about April 30, 2013, it mailed the Debtor a Notice to Vacate, requiring her to vacate the Property.

Approximately eight months after the foreclosure sale, on May 20, 2013, and approximately one month after the issuance of the Notice to Vacate, the Debtor filed a petition under Chapter 13. On June 17, 2013, the Debtor filed her Schedules of Assets and Liabilities. She listed the Property on Schedule A–Real Property with a value of $587,000, subject to secured claims in the sum of $582,250. The Debtor proposed a “cure and maintain plan” pursuant to 11 U.S.C. § 1322(b)(5) to which U.S. Bank has...