Lacey v. BAC Home Loans Servicing, LP (In re Lacey)

• Decision Date: 12 July 2012
• Docket Number: Bankruptcy No. 10–19903–JNF.,Adversary No. 10–1249.
• Citation: 480 B.R. 13
• Parties: In re Walter W. LACEY, Debtor. Walter W. Lacey, Plaintiff v. BAC Home Loans Servicing, LP; GMAC–RFC Holding Company, LLC, Orlans Moran PLLC, and The Bank of New York Mellon Trust Company, N.A., and Darlene McCarthy, Defendants.
• Court: U.S. Bankruptcy Court — District of Massachusetts

480 B.R. 13

In re Walter W. LACEY, Debtor.

Walter W. Lacey, Plaintiff

v.BAC Home Loans Servicing, LP; GMAC–RFC Holding Company, LLC, Orlans Moran PLLC, and The Bank of New York Mellon Trust Company, N.A., and Darlene McCarthy, Defendants.

Bankruptcy No. 10–19903–JNF.

Adversary No. 10–1249.

United States Bankruptcy Court,

D. Massachusetts.

July 12, 2012.

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

MEMORANDUM

JOAN N. FEENEY, Bankruptcy Judge.

I. INTRODUCTION

The matter before the Court is the Motion for Summary Judgment filed by the following defendants: “Bank of America, N.A. as successor by merger to BAC Home Loans Servicing, LP, GMAC–REF Holding Company, LLC, Orlans Moran PLLC, Bank of New York Mellon Trust Company, N.A., and Darlene McCarthy” (collectively, the “Defendants”), through which the Defendants seek summary judgment in their favor with respect to all counts of the First Amended Complaint (the “Complaint”) filed by Walter W. Lacey (the “Plaintiff” or the “Debtor”). The Court heard the Motion and the Plaintiff's Objection on April 30, 2012. The issue presented is whether the Defendants have established the absence of any genuine issues of material fact entitling them to summary judgment pursuant to Fed.R.Civ.P. 56(a), made applicable to this proceeding by Fed. R. Bankr.P. 7056.

II. JURISDICTION

The Plaintiff alleged in his Complaint that this Court has jurisdiction pursuant to 28 U.S.C. § 1334¹ and that “[t]his is a core proceeding within the meaning of that statute [ 28 U.S.C. § 157(b)(2)(A)–(P) ], and the court has jurisdiction to enter a final judgment.” In the alternative, the Plaintiffassented to entry of final judgment by the bankruptcy court in the event the Court were to determine his claims to be non-core.

The Defendants, who have filed answers to the Complaint, denied that the Complaint is a core proceeding and denied that the Court may hear and determine the Complaint because the Plaintiff had no interest in the property when he filed his bankruptcy petition by virtue of the prepetition foreclosure sale, which extinguished his equity of redemption. They do not consent to the entry of a final judgment by this Court.

In a Memorandum dated October 27, 2011, the Court stated:

The Court concludes that the Debtor's causes of action are not “core;” rather they are “related-to” the Debtor's bankruptcy case as resolution of the claims will have a conceivable impact on the bankruptcy estate. See Boston Regional Med. Center, Inc. v. Reynolds (In re Boston Regional Med. Center, Inc.), 410 F.3d 100 (1st Cir.2005). A determination that the Debtor's causes of action are “related-to” the Debtor's bankruptcy case compels the conclusion that this Court has jurisdiction to submit proposed findings of fact and conclusion of law to the district court pursuant to 28 U.S.C. § 157(c)(1).

Lacey v. BAC Home Loans Servicing LP. (In re Lacey), Adv. P. No. 10–1249, Slip op. at 12, 2011 WL 5117767 (Bankr.D.Mass. Oct. 27, 2011) (footnotes omitted).² The Court added that its decision was without prejudice to the filing by the Defendants of a motion to withdraw the reference or a motion for abstention. Id. at 21. None of the Defendants elected to file either type of motion.

As a result of the October 27, 2011 decision, the Court reiterates its conclusion that the Complaint is related to the Debtor's bankruptcy case, see28 U.S.C. 1334(b), as it does not implicate any core matters enumerated in 28 U.S.C. § 157(b)(2). None of the Plaintiff's claims arise under title 11, nor do they arise in his case under title 11, and the Defendants do not consent to the entry of final orders. Accordingly, the Court shall submit its proposed findings of fact and rulings of law to the United States District Court for the District of Massachusetts for review pursuant to 28 U.S.C. § 157(c)(1) when all the proceedings relative to the Plaintiff's claims are concluded in this Court.³ None of the Defendants have filed a proof of claim in the Debtor's Chapter 13 case. The Complaint is non-core and related to the Debtor's bankruptcy case and all of the parties do not consent to the entry of a final order by this Court, and, as a consequence, this Court will not be entering a final judgment in the adversary proceeding. The Court concludes that the United States Supreme Court's decision in Stern v. Marshall, 546 U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), is not implicated in this proceeding. This Court interprets Stern narrowly as directed by the majority decision. Id. at 2620. Pursuant to Stern, bankruptcy courts are divested of authority to enter final judgments with respect to state law counterclaims that are not resolved in the process of ruling on proofs of claim. Those circumstances are not present in this proceeding.

III. PROCEDURAL BACKGROUND

The Debtor filed a Chapter 13 case on September 12, 2010. ⁴ He commenced the above-captioned adversary proceeding one day later. ⁵

On February 17, 2011, this Court entered a Memorandum and Order, denying the Plaintiff's Emergency Motion for Injunctive Relief. In its Memorandum and Order, this Court found that, on September 13, 2010, the debtor, Walter W. Lacey (the “Debtor” or the “Plaintiff”), filed a Verified Complaint against BAC Home Loans Servicing, LP (“BAC”),⁶ GMAC–RFC Holding Company, LLC (“GMAC”), Orlans Moran PLLC (“Orlans Moran”), and The Bank of New York Mellon Trust Company, N.A., which contained no specified counts against the Defendants. The Court further found that, although the Complaint contained generalized allegations that a prepetition foreclosure sale conducted on September 3, 2010, nine days before the filing of his Chapter 13 petition on September 12, 2010, with respect to the Debtor's residence located at 11 Mount Vernon Street, Charlestown, Massachusetts (the “Property”) was improper, the Debtor had failed to satisfy his burden for the entry of an order enjoining any further action with respect to the foreclosure sale at which Darlene McCarthy ⁷ (“McCarthy”) was the successful bidder, paid a deposit and executed a memorandum of sale. The Court specifically found that the Plaintiff had failed to establish a likelihood of success on the merits of his original complaint because it did not contain separate counts, was poorly drafted and failed to set forth cognizable legal theories in support of his claims.

Approximately six months after the commencement of the adversary proceeding against the Defendants, the Plaintiff, on February 25, 2011, filed a First Amended Complaint (the “Complaint”). Prior to the filing of the Complaint, the Court, on January 10, 2011, at a hearing to consider the Plaintiff's Motion for Partial Judgment on the Pleadings, determined that the Plaintiff was entitled to an adequate and comprehensible accounting. The Defendants attached to their Memorandum in Support of Joint Motion to Dismiss, which was filed on April 26, 2011, an email from Caroline O. Driscoll, Esq. to Plaintiff's counsel to which she attached an accounting of the Debtor's loan, captioned “Acquisition Previous Servicer Payment History.” The accounting attached to the email was neither adequate nor comprehensible. Indeed, some pages were barely legible.⁸

In his Complaint, the Plaintiff set forth nine causes of action as follows: Count I—Wrongful Foreclosure; Count II—Promissory Estoppel; Count III—Chapter 93A; Count IV—RESPA; Count V—Fair Debt Collection Practices Act; Count VI—Deceit and Misrepresentation; Count VII—Negligence; Count VIII—Accounting; and Count IX—Infliction of Emotional Distress.

IV. PROPOSED FINDINGS OF FACTA. The Complaint

In his Complaint, the Plaintiff alleged that he first acquired the Property, individually, in 1985. At the time, he was employed at Massachusetts General Hospital as a biomechanical engineer, and his spouse was working part-time, as she primarily was responsible for the care of the couple's four children and the Debtor's mother.

The Debtor executed a note in favor of Fleet Mortgage Corporation (“Fleet”), dated March 29, 1996, in the original principal amount of $113,000. On the same day he executed a mortgage to secure the note in favor of Fleet.

In 2002, the Debtor conveyed an interest in the Property to his wife, who did not execute the note or the mortgage. One year later, the Debtor's spouse was required to reduce her work schedule for unspecified reasons, and, as a result, the Debtor experienced difficulties making his monthly mortgage payments. Eventually, the Debtor's spouse filed a bankruptcy petition to prevent a foreclosure sale.⁹ In her Chapter 13 case, she obtained confirmation of a Chapter 13 plan, but because the Debtor became ill and could not contribute to plan payments, the case was dismissed in 2008, only a few months before the completion of the plan.

In his Complaint, the Debtor further averred that the foreclosure was wrongful and to his great detriment because BAC never provided him with any information validating the amount it claimed was due. Additionally, the Debtor averred that he believed he was current with his payments until BAC refused to accept payments in February 2010.

The Debtor also averred that “[u]pon information and belief,” BAC is the recipient of federal funds intended to benefit him, and individuals like him, who need to modify their mortgages in order to remain in their homes. He added that the EmergencyEconomic Stabilization Act of 2008 was signed into law on October 3, 2008. In implementing the Act, according to the Debtor, the United States Treasury instituted a number of programs, “including the ‘Making Homes Affordable’ Act, Capital Purchase Program, and Capital Assistance Program, among others.” Pursuant to those plans, and the authority provided by H.R. 1424 Title I Sec. 109–110, the Debtor alleged that the United States Treasury has ordered as follows:

Mortgage Foreclosure Mitigation: All recipients of capital investments under the Financial Stability Plan will be required to commit to...