Court Opinion

ID: 9491054
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:02:20.269561+00
Date Added: 2024-06-11T17:54:28.890112
License: Public Domain

DOWD, Senior District Judge,
dissenting.
The action before us today is primarily a foreclosure proceeding. As such, it directly affects the ownership of, and title to real estate by providing a procedure by which the owner, and his or her heirs, may be stripped of their land. As foreclosure proceedings are inherently creatures of state law, the instant diversity case requires the application of the state law of Massachusetts, which provides for extrajudicial foreclosure proceedings, from which this situation arose.3
My colleagues affirm the district court’s grant of summary judgment in this case, concluding the loan agreement reserved in Cadle the right of a mortgagee to maintain the foreclosure proceeding here in question. The majority acknowledges that the “collating error” made by Cadle at the district and appellate court levels resulted in the omission of the Trust Note from the list of those notes for which Cadle reserved the right to foreclose. While the majority is able to move past this error, I hold to the position that this omission should not be overlooked, especially here, where this omission resulted in a record which does not support Cadle’s ability to maintain a foreclosure proceeding. I find that due to the omission of the Trust Note, Cadle did not have a mortgage interest in the Andover Trust property, and thus, under Massachusetts foreclosure law, the foreclosure proceeding is invalid. Thus, I respectfully dissent.
This case comes to us as an appeal of a grant of summary judgment. As such, the standard of review is “de novo.” Garita Hotel Ltd. Partnership v. Ponce Federal Bank, 122 F.3d 88, 89 (1st Cir.1997). Under this standard, it is proper for the court of appeals to make an independent review of the documents, and the entire record, involved in the case.
In the instant case, this independent review of the documents at issue is especially important, as the record does not provide an *65indication of the district court’s reasons for granting the summary judgment. A review of the record reveals that the district court held a hearing for the purpose of resolving the motion for summary judgment. The parties argued their positions, and at the conclusion of the hearing, the district court stated its ruling that Cadle had a mortgage interest. However, the district court did not, either orally or in a subsequent written opinion, explain its reasons for this holding. As a result, it is impossible for a reviewing court to now determine whether the district court considered all of the documents involved, or to review the district court’s reasons for its interpretation of the documents that it did consider.4 For this reason, the court of appeals’ task of a de novo review of the grant of summary judgment is especially important in this case.
The assignment agreement is the first document that must be examined in this transaction.5 The relevant portion of the assignment from Cadle to D.A.N., and then from D.A.N. to Foothill, reads as follows:
THAT FOR VALUE RECEIVED, The Cadle Company, ... (“Assignor”) does hereby grant, bargain,' sell, convey, endorse, deliver, assign and transfer to D.A.N. ... as grantee (“Assignee”), its successors and assigns, without recourse, all of the right, title and interest of Assignor in and to the mortgage “(Mortgage”) ... further described on Exhibit A attached hereto and which encumbers the real property legally described on Exhibit B attached hereto and the note (“Note”) and claim evidenced and/or secured thereby and all other documents, instruments and agreements and collateral securing the indebtedness evidenced by said Note.
(JA at 83, 88) (emphasis added). The And-over Trust mortgage involved in this case is clearly listed on “Exhibit A” of these assignment agreements. (JA at 86). With this document, Cadle assigned all the interest it held as a mortgagee in the Andover Trust note and mortgage to Foothill. As a result, Cadle was no longer a mortgagee, and could not maintain foreclosure proceedings. Lamson & Co. v. Abrams, 305 Mass. 238, 25 N.E.2d 374, 375-76 (1940) (on assignment of mortgage, assignor cannot maintain foreclosure proceedings). Foothill, as the assignee, became the sole mortgagee, and thus the sole party with the authority to maintain foreclosure proceedings. Id.
However, there is another document that must be considered in conjunction with this transaction. The loan agreement between Cadle and Foothill was executed on the same day as the assignment agreement. This loan agreement states that, with regard to certain defined “Pledged Notes,” Cadle reserves for itself the right to collect on the Pledged Notes and, if necessary, foreclose on the mortgages: “all notices of default to be sent to the makers of the Pledged Notes, shall be sent in the name of [Cadle], unless otherwise required by law.” (JA at 284). With this document, Cadle attempted to reserve in itself the rights of a mortgagee despite the assignment of these rights to Foothill. However, a review of the list of “Pledged Notes” referenced in the loan agreement reveals that the Andover Trust note at issue in this *66case is absent. (JA at 315-20).6 Additionally, it was absent from the copy of the loan agreement which was before the district court, and the copy that was given to the Trust by Cadle. Therefore, the Andover Trust note is not among those that Cadle may foreclose upon in the event of default.
The majority acknowledges this sequence of events, but does not find it problematic due to the fact that to this court, Cadle presented new pages of the loan agreement which include the Trust Note, along with an explanation that it was a mere “collation error” that led to the previous inclusion of the incorrect pages. Cadle presented these pages as a result of the argument raised by the Trust in their Appellate Reply brief that the Trust Note was not included in the loan agreement. It is this timing that the majority finds important. The majority holds that the Trust waived this argument by failing to bring it up at the district court level or in its opening brief in this court. Therefore, the majority concludes, despite the fact that the record presents this problem, it is obvious that the parties all believed that the Trust Note was included in the loan agreement, or else they would have made this argument before.
It is precisely this rationale that I cannot join. As an appellate court, we are required to review the record, and if the record does not support the result reached by the district court, we must not affirm. I cannot join the majority’s application of the doctrine of waiver here because, despite the absence of this argument at the district court, I cannot now conclude fi*om the record that all parties knew and intended the loan agreement to include the Trust Note. Furthermore, although the Trust did not always maintain that the Trust Note was not included in the loan agreement, the Trust has always maintained that the foreclosure was invalid and that the assignment agreement was unconditional. To refute this allegation, Cadle produced the loan agreement, arguing that it reserved in Cadle the right to conduct this foreclosure. This document was therefore placed before the district court, with the absence of the Trust Note.
The fact that the Trust now argues an additional reason why the foreclosure is invalid does not change the Trust’s original argument that the foreclosure is invalid. What we must review is whether, given all the documents that were before the district court, we can affirm the decision that Cadle was the mortgagee, and thus able to conduct foreclosure proceedings on the Trust property. I find that it is improper for us to excuse the gap in the record on a mere belief that the parties and the district court judge all understood that the loan agreement applied and included the Trust Note. While it may turn out that the loan agreement did apply, and that the mistake was merely a “collating error,” this is not the sort of a leap of faith that an appellate court should make.
In conclusion, due to the questions of fact in the record concerning whether the Trust Note was included in the loan agreement, I am unwilling to agree that Cadle reserved the right to foreclose on the Trust property. I would, therefore, remand to the district court for a determination of whether the loan agreement applies to this transaction, reserving in Cadle the right of a mortgagee .to foreclose.7

. I am sympathetic to the problems that arise in a system in which a foreclosure proceeding can be done in a nonjudicial manner. In Ohio, my home state, the laws would not allow for this type of extrajudicial foreclosure proceeding, and thus, this particular problem could have been addressed in the more customary judicial procedure. However, because such procedure is allowed here, it must be followed according to the law, and that requires allowing only a "mortgagee" to foreclose. As explained herein, I find that the proper procedure for a nonjudicial foreclosure was not followed here, and for this reason do not join the majority opinion.

. The transcript of the hearing on the summary judgment motion is very short (16 total pages). (Joint Appendix [“JA”] at 371-86). A review of the transcript indicates that the majority of time was spent arguing about the existence of the forbearance agreement, rather than arguing about the validity of the foreclosure. When the foreclosure itself was discussed, however, counsel for the appellant focused on the assignment agreement rather than the loan and security agreement. Id. at 373-75. Appellant's counsel argued primarily that the assignment agreement was unconditional on its face, and therefore the loan and security agreement was not applicable to this transaction. Id. Appellee’s counsel then painted a picture of the transaction that included both documents, and described Cadle’s view that the documents were intended to work together to be a conditional assignment, reserving in Cadle the right to foreclose. Id. at 381-383. The district court then stated that "On this one I think I have an adequate record, at least in part,.... I rule that Cadle does have a mortgage interest.” Id. at 383.

. As the majority recognizes, this was a "multi-step” transaction. Initially, Cadle executed this assignment in favor of D.A.N. Joint Venture II, A Limited Partnership ("D.A.N."), of which Cadle is the general partner. Immediately thereafter, D.A.N. assigned the same property to Foothill, using the identical words of assignment.

. In fact, the only mention of the property at issue in this case appears on Schedule R-l, the “Real Property Security Legal Descriptions." (JA at 321-22).

. As I am dissenting on this basic issue of the validity of the foreclosure, I see no reason to address the secondary issue concerning the amount of the deficiency awarded by the jury.