Court Opinion

ID: 4194195
Source: CourtListenerOpinion
Date Created: 2017-08-08 19:00:49.698097+00
Date Added: 2024-06-11T07:46:45.502182
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 16-2274

  CHRISTOPHER HAYDEN; DENINE L. MURPHY, a/k/a Denine L. Hayden,

                     Plaintiffs, Appellants,

                                v.

 HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee for Wells Fargo
 Asset Securities Corporation Mortgage Asset-Backed Pass Through
      Certificates Series 2007-PA3; WELLS FARGO BANK, N.A.,

                      Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

          [Hon. Denise J. Casper, U.S. District Judge]

                              Before

                   Lynch, Kayatta, and Barron,
                         Circuit Judges.

     Glenn F. Russell, Jr. and Glenn F. Russell, Jr., & Associates,
P.C. on brief for appellants.
     Sean R. Higgins, Y. Frank Ren, and K&L Gates LLP on brief for
appellees.

                          August 8, 2017
             LYNCH, Circuit Judge.         In March 2007, Christopher Hayden

and   Denine   Murphy    ("the    Haydens")     borrowed     $800,000    from   GN

Mortgage, LLC ("the lender") to purchase a property in Rehoboth,

Massachusetts.          The    Haydens      executed     a   promissory      note

memorializing     the   loan     and   a    mortgage    identifying     Mortgage

Electronic Registration Systems, Inc. ("MERS") as the mortgagee,

acting "solely as a nominee" for the lender and the lender's

successors and assigns.          The mortgage also granted MERS, and its

successors and assigns, power of sale over the property.                        In

January 2008, MERS assigned the mortgage to HSBC Bank USA, N.A.

("HSBC") as trustee for WFALT 2007-PA03.               In February 2010, HSBC

reassigned the mortgage to itself as trustee for Wells Fargo Asset

Securities     Corporation,       Mortgage     Asset-Backed      Pass    Through

Certificates, Series 2007-PA3.

             The Haydens defaulted on their loan in 2008.               They then

filed   several    bankruptcy      petitions     and    requested   injunctive

relief, thereby delaying foreclosure until 2016.                    After HSBC

provided notice of a foreclosure sale in June 2016, the Haydens

sued HSBC and Wells Fargo Bank, N.A. ("Wells Fargo"), the mortgage

servicer, to enjoin the sale. They now appeal the district court's

decision to deny their request for a preliminary injunction and to

grant HSBC's and Wells Fargo's motion to dismiss under Federal

Rule of Civil Procedure 12(b)(6).                Specifically, the Haydens

challenge the district court's dismissal of their claims that (1)
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HSBC cannot foreclose on their property under Mass. Gen. Laws ch.

244, § 14, and (2) the mortgage is obsolete by operation of Mass.

Gen. Laws ch. 260, § 33.1

             We review the district court's order of dismissal for

failure to state a claim de novo.          Lemelson v. U.S. Bank Nat'l

Ass'n, 721 F.3d 18, 21 (1st Cir. 2013) (citing Artuso v. Vertex

Pharm., Inc., 637 F.3d 1, 5 (1st Cir. 2011)).        The district court

properly dismissed the Haydens' claim that HSBC cannot foreclose

on the property on their view that MERS's assignment of the

mortgage to HSBC was invalid.       As the district court found, this

claim is foreclosed by precedent, which holds that MERS can validly

assign   a    mortgage   without   holding   beneficial   title   to   the

underlying property, see Culhane v. Aurora Loan Servs. of Neb.,

708 F.3d 282, 291-93 (1st Cir. 2013), and that borrowers do not

have standing to challenge a mortgage assignment based on an

alleged violation of a trust's pooling and servicing agreement,

see Butler v. Deutsche Bank Tr. Co. Ams., 748 F.3d 28, 37 (1st

Cir. 2014) (citing Woods v. Wells Fargo Bank, N.A., 733 F.3d 349,

354 (1st Cir. 2013)).

             Our decision in Dyer v. Wells Fargo Bank, N.A., 841 F.3d
550 (1st Cir. 2016), which was issued approximately six weeks after

     1    The Haydens do not challenge the district court's
dismissal of their claim that Wells Fargo violated Mass. Gen. Laws
ch. 93A by failing to comply with 209 C.M.R. § 18.17 and § 18.21.
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the district court issued its decision in this case, provides

further support for this finding.                      Dyer reaffirmed Culhane's

holding      that   a     mortgage    contract       can     validly    make     MERS   the

mortgagee and authorize it to assign the mortgage on behalf of the

lender to the lender's successors and assigns.                      Id. at 553.         Dyer

also disposed of the claim that the Massachusetts Supreme Judicial

Court's ("SJC") decision in Eaton v. Federal National Mortgage

Association,        969 N.E.2d 1118    (Mass.       2012),      renders    Culhane

noncontrolling where, as here, the foreclosing party holds both

the note and the mortgage.              See Dyer, 841 F.3d at 553-54 & n.2;

see also Eaton, 969 N.E.2d at 1133 n.28 ("[A] foreclosing mortgage

holder such as [the nominee's assignee] may establish that it

either held the note or acted on behalf of the note holder at the

time    of    a   foreclosure        sale    by     filing    an    affidavit     in    the

appropriate registry of deeds . . . .").                       In fact, many of the

arguments advanced by the Haydens' counsel, who also represented

the borrower in Dyer, mirror the arguments that we rejected in

Dyer.

              The district court also properly dismissed the Haydens'

obsolete mortgage claim, which has no basis in the plain text of

the statute or in precedent.                      Under Massachusetts's obsolete

mortgage statute, Mass. Gen. Laws ch. 260, § 33, a mortgage becomes

obsolete and is automatically discharged five years after the

expiration of the stated term or maturity date of the mortgage.
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Nothing in the text of the statute supports the Haydens' assertion

that the acceleration of the maturity date of a note affects the

five-year limitations period for the related mortgage.                 Their

citation to the SJC's decision in Deutsche Bank National Trust Co.

v.   Fitchburg   Capital,    LLC,   28 N.E.3d 416   (Mass.    2015),   is

inapposite because the decision makes no mention of the impact of

an accelerated note on the obsolete mortgage statute's limitations

period.

           We agree that the Haydens failed to state a claim,

substantially for the reasons articulated by the district court.

Without   adopting   the    district     court's   opinion,   we   summarily

affirm.   See 1st Cir. R. 27.0(c).

            So ordered.

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