Court Opinion

ID: 4259656
Source: CourtListenerOpinion
Date Created: 2018-03-29 21:00:11.674114+00
Date Added: 2024-06-11T12:43:54.167064
License: Public Domain

Not for Publication in West's Federal Reporter

          United States Court of Appeals
                        For the First Circuit

No. 16-1679

              MATS A. SAMUELSSON; MARIA A. SAMUELSSON,

                        Plaintiffs, Appellants,

                                      v.

    HSBC BANK USA, N.A., as Trustee on behalf of Ace Securities
 Corp., Home Equity Loan Trust and for the Registered Holders of
  Ace Securities Corp., Home Equity Loan Trust, Series 2006-HE4;
                     OCWEN LOAN SERVICING, LLC,

                        Defendants, Appellees,

                              ROXIE J. ROSE,

                                 Defendant.

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

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

                                   Before

                       Kayatta, Circuit Judge,
                     Souter, Associate Justice,*
                      and Selya, Circuit Judge.

     Glenn F. Russell, Jr. and Glenn F. Russell, Jr.,
& Associates, P.C., on brief for appellants.
     Marissa I. Delinks, Maura K. McKelvey, Robert M. Buchholz,

     * Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
and Hinshaw & Culbertson LLP on brief for appellees.

                         March 29, 2018
              SOUTER, Associate Justice.        Mats and Maria Samuelsson

appeal from the dismissal of their action in the nature of a

petition for declaratory judgment, by which they sought, among

other things, an injunction against a foreclosure sale of their

house.      We affirm.

              According to their allegations, appellants entered into

a loan refinancing arrangement in May 2006. They signed a $560,000

promissory note payable to Sunset Mortgage Company, L.P., and

executed a mortgage agreement for securing repayment of the loan.

Under       its   terms,   appellants    "mortgage[d],    grant[ed],   and

convey[ed]" legal title to the property to Mortgage Electronic

Registration Systems, Inc. (MERS),1 acting "solely as a nominee

for [Sunset] and [Sunset's] successors and assigns."           On May 14,

2009, MERS ostensibly assigned the mortgage to appellee HSBC Bank

USA, N.A., as Trustee on behalf of ACE Securities Corp., Home

Equity Loan Trust and the registered holders of ACE Securities

Corp., Home Equity Loan Trust, Series 2006-HE4 ("HSBC").

        1
        MERS was formed by residential mortgage lenders and
investors "to streamline the process of transferring ownership of
mortgage loans in order to facilitate securitization." Culhane v.
Aurora Loan Services of Nebraska, 708 F.3d 282, 287 (1st Cir.
2013). When a MERS member sells a note to another MERS member,
MERS remains the mortgagee of record. When a MERS member sells a
note to a nonmember, MERS assigns the mortgage to the new
noteholder. "This system reduces paperwork and avoids fees that
otherwise would be required to record assignments of mortgages at
local recording offices." Id.

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             Shortly thereafter, HSBC began foreclosure proceedings

in Massachusetts Land Court, which ultimately entered judgment

authorizing HSBC to foreclose. Appellants then brought this action

in    Massachusetts    Superior   Court     seeking    both    a   declaratory

judgment that HSBC lacked authority to foreclose on the mortgage

because the assignment to HSBC was invalid, and damages for slander

of title committed by recording the assignment.2 Appellees removed

the   action    to   federal   court   on   the   basis   of   diversity   and

successfully moved to dismiss under Federal Rule of Civil Procedure

12(b)(6) for failure to state a claim.

             We review the dismissal order            de novo.      Butler v.

Deutsche Bank Trust Co. Americas, 748 F.3d 28, 32 (1st Cir. 2014).

The Samuelssons' claims depend on the sufficiency of allegations

in support of the proposition that HSBC has never validly held the

mortgage under Massachusetts law.           In support, they allege and

argue, first, that MERS did not have the power to assign the

mortgage and, second, that the assignment was made in violation of

the Pooling and Servicing Agreement ("PSA") governing the Trust.

Both positions are foreclosed by precedent.

             As for the first, it is true that under Massachusetts

law, "the statutes governing foreclosure by sale . . . requir[e]

       2   Appellants do not challenge the dismissal of two other
claims.
                                       - 4 -
a foreclosing mortgagee both to control the note (either as the

noteholder or as its agent) and to hold the mortgage."    Culhane v.

Aurora Loan Services of Nebraska, 708 F.3d 282, 288 (1st Cir. 2013)

(citing Eaton v. Fed. Nat'l Mortg. Ass'n, 969 N.E.2d 1118, 1129 &

n.20, 1131 (Mass. 2012)).3   But prior to sale, "the note and the

mortgage need not be held by the same entity" and, absent a

contractual provision stating otherwise, "a mortgagee may assign

its mortgage to another party."   Id. at 292.

          Appellants suggest that because MERS held the mortgage

merely as the "nominee" for Sunset, it was not the mortgagee and

lacked the power to assign the mortgage.        But we have rejected

this very argument many times over.   See id. at 293; see also Dyer

v. Wells Fargo Bank, N.A., 841 F.3d 550, 553 (1st Cir. 2016)

(declining to accept argument because "we held in Culhane . . .

that a mortgage contract that names 'MERS . . . as nominee for

[Lender] and [Lender's] successors and assigns' does suffice to

make MERS the mortgage holder and then authorize MERS to assign

the mortgage on behalf of the lender to the lender's successors

and assigns"); Butler, 748 F.3d at 32 (rejecting argument because

"[o]ur court has previously considered, and found wanting, this

     3 In an affidavit filed in the Land Court, a representative
of appellee Ocwen Loan Serving, LLC, averred that HSBC was the
holder of the note (which had been endorsed in blank). Appellants
do not challenge HSBC's current status as the noteholder.
                                  - 5 -
precise challenge to MERS's ability to serve as assignor of a

mortgage"); Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 355

(1st Cir. 2013) ("Culhane made clear that MERS's status as an

equitable trustee does not circumscribe the transferability of its

legal interest.").       Appellants offer no persuasive basis on which

to distinguish these cases.

             As for appellants' second argument, they claim that

MERS's assignment was made in violation of the Trust's PSA in two

respects:        first, that the assignment was made after the closing

date provided for in the PSA; second, that the assignment was not

made   by   the    depositor    for     the    Trust.     Whatever       merit   these

contentions might have, our precedents are clear that appellants

do not have standing to press them.                     While "a mortgagor has

standing     to     challenge       a   mortgage      assignment     as     invalid,

ineffective, or void (if, say, the assignor had nothing to assign

or   had    no    authority    to   make      an   assignment   to   a    particular

assignee)," Culhane, 708 F.3d at 291, "an assignment made in

contravention of . . . a trust agreement is at most voidable at

the option of the parties to the trust agreement, not void as a

matter of law," Dyer, 841 F.3d at 554.                  Because such assignments

are merely voidable, appellants' claims of noncompliance with the

PSA are not tantamount to an allegation that the assignment is

invalid, and are claims that appellants lack standing to raise.

See Butler, 748 F.3d at 37 ("Under Massachusetts law, it is clear
                                              - 6 -
that [third-party] claims alleging disregard of a trust's PSA

[charge acts that are] voidable, not void.").       Accordingly, a

mortgagor's "claims that merely assert procedural infirmities in

the assignment of [the] mortgage, such as a failure to abide by

the terms of a governing trust agreement, are barred for lack of

standing. In contrast, standing exists for challenges that contend

that the assigning party never possessed legal title and, as a

result, no valid transferable interest ever exchanged hands."

Woods, 733 F.3d at 354 (citation omitted).   Indeed, in Butler, we

held that the mortgagor lacked standing to raise one of the very

theories of noncompliance raised here: that the assignment was

made after the trust's closing date.      See 748 F.3d at 34, 37.

Appellants' argument boils down to a refusal to accept these cases

as rightly decided, a position we have no warrant to consider.

            In sum, the appellants have alleged no basis to dispute

the validity of the assignment in question and the action was

properly dismissed.

Affirmed.

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