New Haven Savings Bank v. Follins
| Decision Date | 24 May 2006 |
| Docket Number | No. CIV.A.2003-12634-RBC.<SMALL><SUP>1</SUP></SMALL>,CIV.A.2003-12634-RBC.<SMALL><SUP>1</SUP></SMALL> |
| Citation | 431 F.Supp.2d 183 |
| Parties | NEW HAVEN SAVINGS BANK, Plaintiff, v. Althea FOLLINS, Harold Follins, Aetna Finance Company d/b/a ITT Financial Services, Second Federal Funding, United States of America, Bay State Gas, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Craig Todd Gerome, Schultz & Company, Boston, MA, for Althea Follins Pro Se, Harold Follins, Defendant Pro Se.
Kevin J. McCaughey, Ganick, O'Brien & Sarin, Dorchester, MA, for Bay State Gas, Defendant.
Glenn J. Melcher, U.S. Department of Justice, Tax Division, Washington, DC, for United States of America, Defendant.
Daniel P. Murphy, Law Office of Daniel P. Murphy, Chelmsford, MA, for Aetna Finance Company, Cross Claimant.
David M. Rosen, Harmon Law Offices, P.C., Newton, MA, for New Haven Savings Bank, Plaintiff.
Gordon N. Schultz, Schultz & Company, Boston, MA, for Althea Follins, Pro Se, Harold Follins, Defendant Pro Se.
Veronica C. Viveiros, Harmon Law Offices, P.C., Newton, MA, for New Haven Savings Bank, Plaintiff.
Michelle L. Zaff, Kerstein, Coren, Lichtenstein and Finkel, LLC, Wellesley, MA, for Second Federal Funding, Defendant.
MEMORANDUM AND ORDER ON PACIFIC SECURITY, LLC'S MOTION FOR SUMMARY JUDGMENT (# 37) AND MEMORANDUM ON CROSS-MOTION FOR SUMMARY JUDGMENT OF ALTHEA AND HAROLD FOLLINS (# 42)
On November 5, 2003, the plaintiff, New Haven Savings Bank ("the Bank"), filed a complaint in interpleader in the Massachusetts Superior Court. The action arose from a foreclosure of a first mortgage on property located at 5 Lori Lane in Randolph, Massachusetts, owned by the defendants Harold and Althea Follins (jointly, "the Follinses"). The debt the Follinses owed the Bank was satisfied, and the foreclosure sale resulted in a surplus of $106,897.69, which was paid into the Court.
The Bank's interpleader complaint seeks to have parties with a potential interest in the proceeds prove such claims.2 The Bank named several parties with potential claims: the Follinses, Aetna Finance Company d/b/a ITT Financial Services through its successor in interest, Pacific Security, LLC ("Pacific"), Second Federal Funding Corporation, the United States, and Bay State Gas. The United States removed the case to the federal district court under 28 U.S.C. §§ 1442 and 1444 on December 31, 2003.
In January and February, 2004, defendants United States, Second Federal and Bay State filed answers to the complaint. (## 3, 8, 9) On April 5, 2004, the Follinses filed an answer as well as a counterclaim against the Bank. (# 12) More than two months later on June 21, 2004, Pacific Security, LLC ("Pacific") as successor in interest to Aetna/ITT filed an answer and cross-claim for declaratory judgment against all other defendants. (# 15) Pacific alleged that, as the rightful and valid owner of a second mortgage on the property, it is entitled to a lien upon the surplus proceeds and possesses rights superior to all other claimants. (# 15) The Follinses filed an answer to the cross-claim on June 25, 2004.(# 18)
At the end of April, 2005, Pacific filed a motion for summary judgment on its cross-claim (# 37) along with a memorandum in support (including a statement, of material facts) (# 38), and an affidavit with exhibits (# 39). In response, the Follinses submitted an opposition to Pacific's summary judgment motion (# 40), an opposition to Pacific's statement of material facts (# 41), and a cross-motion for summary judgment on their counterclaims (# 42). In support of their cross-motion, the Follinses submitted affidavits (## 43, 46), a statement of material facts (# 44), a motion to strike portions of the affidavit and exhibits filed by Pacific (# 45), and a memorandum of law (# 47). On May 31, 2005, Bay State filed an opposition as well as a supporting affidavit to the Follinses' cross-motion for summary judgment. (## 48, 49) The same day Pacific, too, filed an opposition to the Follinses' cross-motion for summary judgment (# 51), an opposition to the statement of facts (# 53), and an affidavit with exhibits (# 52). Pacific also submitted an opposition to the motion to strike (# 50) and a supplemental affidavit in support of its summary judgment motion (# 54)3. On June 21, 2005; the .Follinses filed a reply brief on their cross-motion for summary judgment. (# 57)
Oral argument on the dispositive motions was heard on July 11, 2005. After hearing, summary judgment between the Follinses, Bay State and the United States was denied because genuine issues of material fact exist. The question of summary judgment as between the Follinses and Pacific was taken under advisement. In response to an amended procedural order (# 62) issued by the Court on November 14, 2005, the Follinses and Pacific have each filed a supplemental memorandum (## 63, 64). At this juncture, the motions vis-a-vis the Follinses and Pacific are ripe for decision.
The Follinses, husband and wife, are residents of Massachusetts and the former owners of the property in Randolph, Massachusetts, as well as the holders, or former holders, of the equity of redemption in the property. (# 44 ¶¶ 1, 2, 74) The Follinses entered into a loan agreement with Aetna/ITT and executed a promissory note (the "Note") on September 22, 1987 in the original amount of $43,280.71, which was secured by a second mortgage (the "Mortgage") on the property the same day. (# 44 ¶¶ 11, 12) The Follinses' signatures on the Note were witnessed by Leslie Saunders and Diane Duarte, two employees of Aetna/ITT in the Rhode Island office where the Note was signed. (# 44 ¶ 13) The Follinses made payments on the Note until May 18, 1993, at which point they defaulted by failing to make further payments. (# 44 ¶ 14)
Pursuant to a March 31, 1995 Asset and Purchase Agreement and Bill of Sale (collectively "1995 Purchase Agreement"), Aetna/ITT allegedly sold the Note and Mortgage to Transamerica Financial Services ("TFS"). (# 44 ¶ 15)5 Shortly thereafter, on June 13, 1995, the Follinses filed for Chapter 13 bankruptcy in Bankruptcy Court for the District of Massachusetts. (# 52 ¶ 3) On September 18, 1995, TFS filed a Proof of Claim ("TFS Proof of Claim") in the bankruptcy proceeding in the amount of $41,948.16, which TFS contended was the outstanding balance on the Note that the Follinses owed TFS. (# 44 ¶ 17; # 46, Exh. 2) On December 18, 1995, the Follinses filed an objection to the TFS Proof, which objection was sustained by the Bankruptcy Court on February 26, 1996. (# 44 ¶ 18) TFS did not appeal the decision regarding the objection. (# 44 ¶ 19)
Ultimately, on June 2, 1997, nearly two years after the initial bankruptcy filing, the Bankruptcy Court entered an order granting the Chapter 13 trustee's motion to dismiss the bankruptcy proceedings. (# 52 ¶ 4 and Exh. B) The case was closed without a discharge of the Follinses' debts on June 17, 1997. (# 52 ¶ 4 and Exh. B6) The Follinses again filed a petition for Chapter 13 bankruptcy on March 8, 1999, which was likewise dismissed on September 25, 2000 and closed on October 17, 2000 without any discharge of the Follinses' debt.
Pursuant to a July 29, 2002 Purchase Agreement and Bill of Sale ("2002 Purchase Agreement"), Transamerica Home Loan allegedly sold a portfolio of approximately 63,0000 unspecified "loans" to Pacific under a power of attorney granted by TFS. A redacted exhibit included with the Bill of Sale purports to list those loans sold/purchased as part of the portfolio. (# 54, Exh. B) This exhibit apparently lists the Follinses' loan as being included in the portfolio, although a complete list of all loans included in the transfer is not set forth. (# 54 ¶ 10 and Exh. B) After closing the sale/purchase of the portfolio, TFS physically transferred the individual loan files to Pacific, including the Follinses' loan file. (# 54 ¶ 11)
On May 13, 2004, Computer and Leasing Corporation ("C & E") — claimed successor in interest by merger to Aetna/ITT — appears to have assigned "all rights, title, and interest" in the Follinses' Note and Mortgage to TFS. (# 38 ¶ 3; # 39, Exh. C) Later the same day, TFS in turn assigned "all rights, title, and interest" in the Note and Mortgage to Pacific. (# 38 ¶ 4; # 39, Exh. D7) The authority to execute these back-to-back May 2004 assignments ("2004 Assignments") purportedly arose from two documents: (1) A December 16, 2002 power of attorney substitution, and (2) the 2002 Purchase Agreement. (# 44 ¶ 24)
In correspondence between the parties' attorneys dated January 24, 2005, the Follinses requested a copy of the 2002 Purchase Agreement. (# 46 ¶ 11 and Exh. 6) Pacific, apparently out of concern regarding the confidentiality of releasing the 2002 Purchase Agreement, refused to produce this documentation at that time. (# 46 ¶ 12 and Exh. 7) Redacted copies of the 2002 Purchase Agreement, the Bill of Sale and the list of loans showing the inclusion of the Follinses' loan within the transferred portfolio were ultimately filed as exhibits to the supplementary affidavit of Christopher Foreman (# 54) on May 31, 2005.
Numerous powers of attorney and power of attorney substitutions purport to authorize Pacific to demand, reduce to possession, sue upon, collect and receive funds for loans and retail installment contracts in its portfolio. (# 38 ¶ 5; # 39, Exh. E8) On February 2, 2005, more than a year after the filing of the interpleader action and approximately nine months after the back-to-back May 13, 2004 assignments from Aetna/ITT to TFS and TFS to Pacific, C & E — the original payee of the Note — granted a power of attorney to Pacific, specifically authorizing Pacific to demand, reduce to possession, sue upon, collect, and receive funds under the Follinses' Note and Mortgage. (# 38 ¶ 6; # 39, Exh. F9)
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