Silveira v. Wells Fargo Bank, N.A. (In re Silveira)
| Decision Date | 02 May 2013 |
| Docket Number | Case No. 11-44812-MSH,Adversary Proceeding No. 12-4036 |
| Parties | In re: CARLOS ROBERTO SILVEIRA AND FABIANA RIBEIRO SOUZASILVEIRA a/k/a FABIANA RIBEIRO SOUZA-SILVEIRA Debtors CARLOS ROBERTO SILVEIRA AND FABIANA RIBEIRO SOUZASILVEIRA Plaintiffs v. WELLS FARGO BANK, N.A., VANESSA NIXON AND MICHELLE MOREIRA Defendants |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
Defendant, Wells Fargo Bank, N.A., seeks dismissal of four counts of a five count verified amended complaint filed by plaintiffs, Carlos Roberto Silveira and Fabiana Robeiro Souzasilveira, who are the debtors in the main case. Those counts hinge on two claims: first, that the foreclosure of the mortgage on their home conducted by Wells Fargo was invalid and second, that Wells Fargo failed adequately to respond to the Siveiras' qualified written request ("QWR") under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA"), asamended by Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203 § 1463(c).
In ruling on a motion to dismiss, I must assume that the allegations in the complaint are true. Here, the relevant allegations are as follows.
On or about February 28, 2005, the Silveiras bought a building located at 90 Southville Road in Southborough, Massachusetts consisting of a residence for them and a pizzeria. In order to purchase the property, the Silveiras borrowed $375,956 from Wells Fargo and secured their repayment obligation with a mortgage on the property. Not long after they purchased the property the economy began its downward spiral and even though they were current on their payments to Wells Fargo, the Silveiras decided to seek a loan modification to reduce their monthly mortgage payments. On or about September 29, 2009, they and Wells Fargo executed a loan modification agreement. The agreement, which is captioned Loan Modification Agreement, refers to an FHA case number and bears the notation "HUD Modification Agreement." By this point the Silveiras were no longer current because the loan modification agreement added $30,666.171 to the outstanding principal balance of their loan thus increasing the principal to $382,972.03. The new principal amount resulted in a $260 increase in the Silveiras' monthly mortgage payment.
Sometime in the spring of 2009, the Silveiras met defendant Vanessa Nixon who offered to help them negotiate a new loan modification agreement with Wells Fargo.2 Ms. Nixon, whois not an attorney, instructed them to stop making the payments called for under the existing loan modification agreement. Relying on Ms. Nixon's advice, the Silveiras ceased making payments.
Also around the spring of the same year, Ms. Souzasilveira, accompanied by her daughter, traveled to Brazil for medical treatment. For the next year or so Mr. Silveira traveled between Massachusetts and Brazil several times to visit his wife and child. In September 2010, Mr. Silveira gave Ms. Nixon a durable power of attorney so she could continue to negotiate a new loan modification and, if necessary, file bankruptcy on his behalf. The complaint does not state that Ms. Souzasilveira also granted Ms. Nixon a power of attorney but I take judicial notice of the Silveiras' admission in their opposition to a separate motion to dismiss of defendant Moreira that both of the Siveiras executed valid powers of attorney. Ms. Nixon, acting pursuant to the durable powers of attorney, hired defendant Michelle Machado Moreira, as the Silveiras' attorney. Attorney Moreira filed three petitions under chapter 7 of the Bankruptcy Code (11 U.S.C. § 101 et. seq.) on behalf of the Silveiras while they were in Brazil. Each was filed without the Silveiras' knowledge. Each was dismissed for failure to file various documents.3
The Silveiras spoke with Ms. Nixon several times while they were in Brazil and during each conversation she assured them that "everything was fine." While the Silveiras were in Brazil, they were also in frequent communication with Wells Fargo, either personally or through their agents, defendants Nixon and Moreira. There is nothing in the amended complaint toindicate that the Silveiras, Ms. Nixon or Ms. Moreira informed Wells Fargo that the Silveiras were residing, even temporarily, in Brazil.
On June 3, 2011, while the Silveiras were still in Brazil, Wells Fargo foreclosed its mortgage on the Southborough property by exercising its statutory power of sale and by making entry. 4 As it represented in a motion for relief from stay filed in the main case, Wells Fargo purchased the Southborough property at the foreclosure sale. Wells Fargo's certificate of entry was executed by John McCarthy as its attorney-in-fact under a power of attorney dated July 21, 2011, which was more than one month after Mr. McCarthy conducted the foreclosure.
In August 2011, Mr. Silveira returned home from Brazil. In his mail was a notice informing him that the post office was holding certified mail addressed to him.5 When he went to retrieve it, he was informed that due to the passage of time the certified mail had been returned to the sender, which the Silveiras believe was either Wells Fargo or its attorneys.6
On November 17, 2011, the Silveiras filed the joint chapter 13 petition instituting this case. On April 3, 2012, Wells Fargo, alleging that it had purchased the Southborough property at the foreclosure sale for $428,163.43, sought relief from the automatic stay provisions of theBankruptcy Code to commence eviction proceedings against the Silveiras. On April 17, 2012, the Silveiras filed an opposition to the motion for stay relief and attached what they claim was a QWR, which included a demand under MASS. GEN. LAWS ch. 93A.7 The QWR was dated April 17, 2012. The record does not indicate when the QWR was received by Wells Fargo but by letter dated May 14, 2012, Wells Fargo acknowledged receipt of the QWR. On July 10, 2012, it responded to the QWR questioning whether it actually constituted a QWR, but enclosing copies of certain requested documents.8 Also on April 17, 2012, the Silveiras commenced this adversary proceeding and so I consolidated it with the motion for relief from stay. Wells Fargo sought and obtained dismissal of the original complaint but I granted the Silveiras' leave to amend their complaint, which they did. The amended complaint is now the subject of Wells Fargo's second motion to dismiss.
Massachusetts law requires that before a foreclosure can occur the mortgagee must deliver certain notice to the mortgagor and prescribes both the manner and timing of such notice.
MASS. GEN. LAWS ch. 244, § 35A, which was added by St. 2007, ch 206, § 11 and which became effective on May 1, 2008, see St. 2007, ch. 206 § 21, requires a mortgagee who, because of a payment default, wishes to accelerate a note secured by a consumer residential mortgage notonly to inform the mortgagor of the mortgagee's intent to accelerate the note but also to provide the mortgagor with information regarding his right to cure the default or obtain assistance in dealing with his defaulted loan. When § 35A was enacted, it stayed for at least ninety days from the date of notice the mortgagee's right to accelerate the unpaid balance of a note.
Section 35A was amended by Acts 2010, ch. 258, §§ 7 and 8, effective on August 7, 2010.9 Among other things, the notice period was extended from ninety to one hundred fifty days.10 Also, the required information to be included in the notice was expanded to include advising the mortgagor of his right to sell the mortgaged property and of his right, in appropriate instances, to seek a loan modification and warning him that he could be evicted from his home after foreclosure.11 Prior to the enactment of § 35A, a mortgagee could foreclose by entry underMASS. GEN. LAWS ch. 244, § 1 without giving his mortgagor notice of his intent to foreclosure.
CRBJ, LLC v. Millien, No. 353549KCL, 2008 WL 2891004 (Mass. Land Ct. July 29, 2008). Section 35A contains no exception for foreclosure by entry so the notice mandated by § 35A must be given to a mortgagor before foreclosure by sale or by entry can occur.
Only after the notice of acceleration and right to cure (the "§ 35A notice") is sent and the required time has elapsed without any action by the mortgagor may a mortgagee commence an action in state court under the Servicemembers Civil Relief Act, 50 App. U.S.C. § 501 et seq. ("SCRA"), which is a prerequisite to most residential mortgage foreclosures in Massachusetts.12 As part of this action, the mortgagee must file an affidavit certifying compliance with § 35A. MASS. GEN. LAWS ch. 244, § 35A(j).13
Upon receipt of an order in the SCRA proceeding the mortgagee may issue notice of the actual foreclosure sale. Such notice must be given by publication and by registered mail in accordance with MASS. GEN. LAWS ch. 244, § 14 which provides in relevant part:
no sale under such power shall be effectual to foreclose a mortgage, unless, previous to such sale, notice thereof has been published once in each of three successive weeks, the first publication to be not less than twenty-one days before the day of sale, in a newspaper, if any, published in the town where the land lies or in a newspaper with general circulation in the town where the land lies and notice of the sale has been sent by registered mail to the owner or owners of record of the equity of redemption as of 30 days prior to the date of sale, said notice to be mailed by registered mail at least 14 days prior to the date of sale to said owner or owners to the address set forth in section 61 of chapter 185, if the land is then registered or, in the case of unregistered land, to the lastaddress of the owner or owners of the equity of redemption appearing on the records of the holder of the mortgage, if...
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