LaRace v. Wells Fargo Bank, N.A.

• Decision Date: 22 March 2021
• Docket Number: No. 19-P-1507,19-P-1507
• Parties: Mark A. LARACE & another v. WELLS FARGO BANK, N.A., trustee, & another.
• Court: Appeals Court of Massachusetts

99 Mass.App.Ct. 316

166 N.E.3d 1025

Mark A. LARACE & another¹

v.WELLS FARGO BANK, N.A., trustee,² & another.³

No. 19-P-1507

Appeals Court of Massachusetts, Suffolk..

Argued November 16, 2020.

Decided March 22, 2021.

Glenn F. Russell, Jr., Fall River, for the plaintiffs.

Marissa I. Delinks, Boston, for the defendants.

Present: Wolohojian, Milkey, & Sullivan, JJ.

SULLIVAN, J.

This is the third in a series of lawsuits brought by Mark A. LaRace and Tammy L. LaRace challenging the validity of Wells Fargo Bank, N.A.’s (Wells Fargo), efforts to foreclose on the mortgage on the LaRaces’ home.⁴ On appeal the LaRaces contend, among other things, that the 2008 mortgage assignment upon which Wells Fargo relies is void because it merely confirms a prior invalid blank assignment. On the defendants’ motion for summary judgment, a judge of the Land Court concluded that the LaRaces’ claims were barred in part by res judicata and were also properly dismissed as a matter of law. On appeal, the LaRaces contend that the judge erred by concluding that: (1) res judicata barred their claims where the claims arose from a foreclosure commenced after the LaRaces’ prior actions were dismissed; and (2) Wells Fargo established that, at the time of foreclosure, it held and had the right to enforce both the mortgage and the note. The LaRaces also appeal from an order sanctioning their counsel under Mass. R. Civ. P. 11, as amended, 456 Mass. 1401 (2010). We affirm, albeit for reasons which differ in some respects from those of the motion judge.

Background. 1. Mortgage default and 2007 foreclosure. The LaRaces borrowed money from Option One Mortgage Corporation (Option One) in 2005. The debt was evidenced by an adjustable rate note and secured by a mortgage on their home in Springfield. The note was "due and payable on June 01, 2035." The mortgage referenced this maturity date.

In 2005, Option One executed an assignment of the mortgage in blank, meaning that the assignment did not specify the assignee. The mortgage subsequently was pooled with others and securitized. Wells Fargo was designated in the pooling and servicing agreement as the trustee of a trust fund consisting of a pool of mortgages. Ocwen Loan Servicing, LLC (Ocwen), was the loan servicer and attorney-in-fact for Wells Fargo.

In August 2006, the LaRaces defaulted on their payment obligations. In 2007, Wells Fargo commenced a nonjudicial foreclosure sale of the property, which was completed on July 5, 2007. At the time it foreclosed, Wells Fargo did not hold the mortgage. It was not until May 7, 2008, that Option One executed an assignment of the mortgage to Wells Fargo. The assignment, which stated it was effective as of April 18, 2007, was recorded on May 12, 2008. The foreclosure deed was recorded on the same date.

Wells Fargo then brought a quiet title action in the Land Court in October of 2008. The judge entered judgment against Wells Fargo, holding that the 2007 foreclosure was invalid because Wells Fargo could not establish that it held the mortgage at the time of the foreclosure. The Supreme Judicial Court affirmed the judgment against Wells Fargo in one of three companion cases decided in U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637, 654, 941 N.E.2d 40 (2011) ( Ibanez ).

On March 7, 2012, Option One executed a confirmatory assignment of the mortgage to Wells Fargo. The confirmatory assignment stated it was "intended to clarify the assignor in the [2008 a]ssignment."

The confirmatory assignment was recorded on March 14, 2012.

2. 2012 try title action. Wells Fargo issued a default notice to the LaRaces in 2012. The LaRaces responded by filing a try title action, see G. L. c. 240, §§ 1 - 6, in the Land Court against Wells Fargo, Option One, and a mortgage servicing company. The defendants removed the action to the United States District Court for the District of Massachusetts. A United States District Court judge dismissed the action pursuant to Fed. R. Civ. P. 12 (b) (6). The judge found that, although the LaRaces were in default on their mortgage, Wells Fargo had not made any attempts to foreclose since 2007. Because "[u]ncertainty as to who holds a valid mortgage does not provide the requisite adversity to cloud a mortgagor's claim of equitable title," the judge held that the LaRaces complaint had not alleged an essential element of a try title claim: an adverse claim clouding record title to the property (citation omitted). LaRace v. Wells Fargo Bank, N.A., 972 F. Supp. 2d 147, 153 (D. Mass. 2013). The action was therefore dismissed. Id. at 154.

3. 2014 Superior Court action. In 2014, the LaRaces filed an action in Hampden County Superior Court against Wells Fargo, Ocwen, and other entities for wrongful foreclosure, violation of G. L. c. 93A, and slander of title. All three claims arose from the failed 2007 foreclosure; they alleged that Wells Fargo and Ocwen made false statements and engaged in deceptive practices between 2007 and 2014 by representing they had the right to foreclose based upon the 2008 assignment, an assignment the LaRaces contended was void. The judge granted the defendants’ motion to dismiss on the grounds that the claims were barred by the statute of limitations. The judge's decision was affirmed in an unpublished decision on appeal. See LaRace v. Wells Fargo Bank, N.A., 92 Mass. App. Ct. 1126, 102 N.E.3d 1030 (2018).

4. 2018 foreclosure. On or about February 17, 2017, Ocwen mailed the LaRaces another default notice. Thereafter, Wells Fargo again took the first steps in the nonjudicial foreclosure process.

On August 23, 2017, Ocwen executed an affidavit regarding compliance with G. L. c. 244, § 35B, and an affidavit regarding the note, pursuant to G. L. c. 244, § 35C. Both affidavits were later recorded. On or about June 5, 2018, Wells Fargo sent the LaRaces notice of its intent to foreclose. A foreclosure by power of sale and by entry was conducted on July 3, 2018. Wells Fargo purchased the property and a foreclosure deed was recorded.

After the sale, Ocwen recorded an affidavit certifying that Wells Fargo was the holder of the note and mortgage at the time of the foreclosure, and an affidavit certifying that the contents of the notice of default strictly complied with the notice provisions of the mortgage.

5. This action. On June 29, 2018, before the foreclosure sale, the LaRaces filed this action in the Land Court against Wells Fargo, Ocwen, and others.⁵ The LaRaces alleged seven causes of action against Wells Fargo or Ocwen: (1) count I, seeking a declaratory judgment that Wells Fargo and Ocwen did not have the right to foreclose because the 2008 assignment was void; (2) count II, seeking a declaratory judgment that Wells Fargo and Ocwen violated G. L. c. 244, § 35C, by failing to certify a chain of title for the note; (3) count III, against Wells Fargo, seeking a declaratory judgment that the mortgage was obsolete pursuant to G. L. c. 260, § 33 ; (4) count IV, alleging that Wells Fargo violated G. L. c. 93A by initiating foreclosure in 2007 and 2018, allegedly because the 2008 assignment was not valid; (5) count V, alleging that Wells Fargo's publication of the 2008 mortgage assignment, foreclosure deeds, and other foreclosure documents constituted slander of title because there was no valid assignment of the mortgage; (6) count VI,⁶ seeking a declaratory judgment that Wells Fargo did not have the legal right to enforce the note; and (7) count VII to quiet title under G. L. c. 240, §§ 6 - 10, on the grounds that the 2008 assignment was void.

Initially, the judge declined to take jurisdiction over counts IV and V for violation of G. L. c. 93A and slander of title and dismissed those counts without prejudice. Wells Fargo and Ocwen moved for summary judgment on the remaining counts.

After oral argument, a judge allowed the defendants’ motion for summary judgment. The judge held that the doctrines of claim preclusion and issue preclusion barred all of the LaRaces’ claims in this action -- including counts IV and V, over which he had previously declined jurisdiction -- because the same issues and claims were, or could have been, adjudicated in the 2012 try title action and the 2014 Superior Court action. The judge also ruled that (1) the 2008 assignment "demonstrate[d] the successful transfer of the mortgage to Wells Fargo"; (2) Wells Fargo was not required to establish a chain of title for the note; and (3) acceleration of the note when the LaRaces defaulted on their payment obligations did not accelerate the maturity date of the mortgage for purposes of the obsolete mortgage statute, G. L. c. 260, § 33.

The judge also issued an order to show cause why the LaRaces’ attorney should not be sanctioned under Mass. R. Civ. P. 11 for filing slander of title and wrongful foreclosure claims arising from the 2007 foreclosure when those claims had already been adjudicated in the 2014 Hampden County Superior Court action. Following briefing and oral argument, the judge ordered counsel to pay the attorney's fees in the amount of $3,768.45 that Wells Fargo and Ocwen incurred to defend counts IV and V through the initial dismissal. The LaRaces appealed from both the judgment and the decision on the order to show cause.

Discussion. "We review a grant of summary judgment de novo to determine ‘whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.’ " Pinti v. Emigrant Mtge. Co., 472 Mass. 226, 231, 33 N.E.3d 1213 (2015), quoting Juliano v. Simpson, 461 Mass. 527, 529–530, 962 N.E.2d 175 (2012). Here, for the reasons discussed below, Wells Fargo and Ocwen were entitled to judgment as a matter of law on all claims, either on the grounds of res judicata or on the merits.

1. Subject matter jurisdiction. As a preliminary matter, the judge's initial conclusion that he lacked jurisdiction over counts IV and V, the G. L. c. 93A and slander of...