Court Opinion

ID: 3172093
Source: CourtListenerOpinion
Date Created: 2016-01-26 14:05:50.209809+00
Date Added: 2024-06-11T11:57:44.318299
License: Public Domain

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                   THE SUPREME COURT OF NEW HAMPSHIRE

                             ___________________________

U.S. Court of Appeals for the First Circuit
No. 2014-0782

                               JOSEPH CASTAGNARO

                                         v.

                        THE BANK OF NEW YORK MELLON

                           Submitted: January 7, 2016
                         Opinion Issued: January 26, 2016

      The Law Offices of Martin & Hipple, PLLC, of Concord (Stephen T. Martin
on the brief), for the plaintiff.

      Primmer Piper Eggleston & Cramer, P.C., of Manchester (Thomas J.
Pappas on the brief), and Winston & Strawn, LLP, of Charlotte, North Carolina
(Elizabeth T. Timkovich and Phoebe N. Coddington on the brief), for the
defendant.

      DALIANIS, C.J. Pursuant to Supreme Court Rule 34, the United States
Court of Appeals for the First Circuit (Howard, J.) certified to us the following
questions of law:

      1) Does New Hampshire common law and/or RSA § 479:25 require
      a foreclosing entity to hold both the mortgage and note at the time
      of a nonjudicial foreclosure? If so, can an agency relationship
      between the note holder and the mortgage holder meet that
      requirement, and does language in the mortgage naming the
      mortgagee “nominee for lender and lender’s successors and
      assigns” suffice on its own to show an adequate agency
      relationship?

      2) Assuming that the common law and/or RSA § 479:25 requires a
      unity of the mortgage and note at the time of a nonjudicial
      foreclosure, and that an agency relationship between the note
      holder and the mortgage holder does not satisfy such a
      requirement, can the parties’ intent to separate the two overcome
      the unity rule? If so, does separating the mortgage and note at the
      onset of the transaction indicate such intent as a matter of law?

For the reasons stated below, we answer the first question as follows: We need
not answer whether New Hampshire common law or RSA 479:25 (2013)
(amended 2015) requires a foreclosing entity to hold both the mortgage and
note at the time of a non-judicial foreclosure because an agency relationship
between the noteholder and the mortgage holder does meet any such
requirement and language in the mortgage naming the mortgagee “nominee for
lender and lender’s successors and assigns” suffices on its own to show an
adequate agency relationship. See Bergeron v. N.Y. Community Bank, 168
N.H. ___, ___, 121 A.3d 821, 825-27 (2015). In light of our response to the first
question, we need not address the second question. See Therrien v. Sullivan,
153 N.H. 211, 212 (2006).

       The First Circuit’s order provides the following facts. In April 2007, the
plaintiff, Joseph Castagnaro, executed a promissory note in favor of Regency
Mortgage Corporation (Regency) and a mortgage to Mortgage Electronic
Registration Systems, Inc. (MERS) as nominee for Regency (the lender) and
Regency’s successors and assigns. From that point forward, the mortgage
(evidencing the security interest in the property) and the note (evidencing the
underlying agreement to repay the loan on the property secured by the
mortgage) traveled different routes.

      On December 3, 2010, MERS assigned the mortgage to BAC Home Loan
Servicing (BAC). BAC subsequently assigned the mortgage to the defendant,
The Bank of New York Mellon (Bank). The Bank is the current mortgagee.

      The record contains two versions of the note. The first shows an undated
indorsement from Regency to American Residential Mortgage (American), and
the second includes an undated assignment from Regency to American, an
undated indorsement from American to Countrywide Bank FSB, an undated
assignment from Countrywide Bank FSB to Countrywide Home Loans, and an
undated indorsement in blank.

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       After the plaintiff failed to make certain mortgage payments, the Bank
sought to foreclose. Days before the scheduled foreclosure sale, the plaintiff
obtained an ex parte injunction in superior court. The Bank removed the case
to federal court on diversity jurisdiction grounds.

      Once in federal court, the plaintiff amended his complaint, and the Bank
moved to dismiss it. The federal district court granted the Bank’s motion,
concluding that the parties’ intent to separate the mortgage and note at the
outset of the transaction trumped any common law rule requiring unity. The
federal district court ruled that because the Bank was the mortgagee, it could
proceed with the foreclosure under RSA 479:25, which authorizes a
“mortgagee” to conduct a non-judicial foreclosure when, as in this case, the
mortgage contains a clause allowing it. The plaintiff appealed to the First
Circuit and requested that the First Circuit certify questions of law to this
court pursuant to Supreme Court Rule 34.

       The parties dispute whether our decision in Bergeron answers the first
certified question. Like the plaintiff in this case, the plaintiff in Bergeron
executed both a note and a mortgage on the same day. Bergeron, 168 N.H. at
___, 121 A.3d at 822. Like the note here, the Bergeron note was executed in
favor of a lender; in Bergeron, the lender was Drew Mortgage Associates, Inc.
(DMA). Id. at ___, 121 A.3d at 822. Like the note here, the Bergeron note had
been transferred a number of times as indicated by an allonge with a number
of indorsements. Id. at ___, 121 A.3d at 822. The holder of the Bergeron note
at the commencement of the foreclosure proceedings is not identified. Id. at
___, 121 A.3d at 822.

      The mortgage in Bergeron is also similar to the mortgage in this case. In
both cases, the mortgage was given to MERS, as nominee for the lender and its
successors and assigns. Id. at ___, 121 A.3d at 822. And, in both cases, the
mortgage was ultimately assigned to a bank that, upon the homeowner’s
default on the mortgage, initiated foreclosure proceedings. Id. at ___, 121 A.3d
at 822. The bank in Bergeron was New York Community Bank (NYCB). Id. at
___, 121 A.3d at 822.

       One issue in Bergeron was whether NYCB had the authority to foreclose
even if it did not hold the note. See id. at ___, 121 A.3d at 823, 825. We held
that “an agent of the noteholder may properly institute foreclosure proceedings
under RSA 479:25.” Id. at ___, 121 A.3d at 825. We also upheld the trial
court’s finding that NYCB was the agent of the unidentified noteholder based
solely upon the language of the mortgage. Id. at ___, 121 A.3d at 826-27. We
explained that the mortgage alone conclusively established that there was an
agency relationship between NYCB and “any downstream assignee of DMA that
held the Note at the commencement of foreclosure.” Id. at ___, 121 A.3d at
826.

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      The language upon which we relied in the Bergeron mortgage is identical
to that of the mortgage in this case. Both mortgages state that “MERS is a
separate corporation that is acting solely as a nominee for Lender and Lender’s
successors and assigns.” Id. at ___, 121 A.3d at 822. Both mortgages also
expressly grant MERS (solely as nominee for the lender and its successors and
assigns) power of sale and the right to foreclose and sell the mortgaged
property. Id. at ___, 121 A.3d at 822. In Bergeron, we explained that this
language “plainly authorizes MERS to act on the Lender’s behalf, albeit in a
limited way, thus evidencing the existence of an agency relationship.” Id. at
___, 121 A.3d at 826.

       Although Bergeron presented the issue of whether unity of note and
mortgage is required in a non-judicial foreclosure, we found it unnecessary to
decide that question and held that: (1) an agent of the noteholder may properly
initiate foreclosure proceedings; and (2) language in the mortgage naming the
mortgagee as “nominee for Lender and Lender’s successors and assigns”
conclusively establishes the requisite agency relationship. Id. at ___, 121 A.3d
at 823, 825-27. Similarly, although the first certified question asks whether
either our common law or RSA 479:25 requires a foreclosing entity to hold both
the mortgage and the note at the time of a non-judicial foreclosure, we find it
unnecessary to answer this question in light of our holding in Bergeron. Our
holding in Bergeron is dispositive. Our answer to the first certified question
obviates the need for us to answer the second certified question.

      In arguing for a different result, the plaintiff contends that, because he
questions the validity of the assignment of the mortgage and, therefore, the
agency relationship between the noteholder and the Bank, the Bank in this
case, unlike NYCB in Bergeron, is not entitled to foreclose. See id. at ___, 121
A.3d at 827 (declining to “address whether the defendant could foreclose if the
agency relationship was irregular or legitimately challenged by the plaintiff”).
The merits of the plaintiff’s case are not before us, however. Our role is only to
respond to the questions of law transferred to us by the First Circuit.

                                                  Remanded.

      HICKS, CONBOY, LYNN, and BASSETT, JJ., concurred.

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