Court Opinion

ID: 4098032
Source: CourtListenerOpinion
Date Created: 2016-11-14 22:00:43.662123+00
Date Added: 2024-06-11T14:18:05.596341
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 15-2421

                         EDYTHE L. DYER,

                      Plaintiff, Appellant,

                               v.

   WELLS FARGO BANK, N.A., d/b/a America's Servicing Company;
      U.S. BANK, N.A., as Trustee for CSFB Mortgage-Backed
            Pass-Through Certificates, Series 2005-2,

                     Defendants, Appellees.

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

          [Hon. M. Page Kelley, U.S. Magistrate Judge]

                             Before

                 Torruella, Kayatta, and Barron,
                         Circuit Judges.

     Glenn F. Russell, Jr., with whom Glenn F. Russell Jr., &
Associates, P.C. was on brief, for appellant.
     David E. Fialkow, with whom Jeffrey S. Patterson, Michael R.
Stanley, and K&L Gates LLP were on brief, for appellees.

                        November 14, 2016
           BARRON, Circuit Judge.          The plaintiff, Edythe Dyer,

brought this suit against U.S. Bank, N.A. ("U.S. Bank") and Wells

Fargo Bank, N.A. ("Wells Fargo"), arising out of a foreclosure

sale on her property.     The suit was dismissed, and we now affirm.

                                     I.

           In 2004, Dyer executed a promissory note to Dreamhouse

Mortgage Corporation ("Dreamhouse") and granted a mortgage on her

property   at    41   Commonwealth    Avenue,    Unit    #9,   in    Boston,

Massachusetts (the "Property").            She granted the mortgage to

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

"nominee" for Dreamhouse and its successors and assigns.            In 2008,

MERS executed a document entitled "Assignment of Mortgage," which

transferred the mortgage to U.S. Bank, as trustee.             The document

was recorded with the Registry of Deeds for Suffolk County,

Massachusetts.     MERS also executed an assignment of the mortgage

to U.S. Bank in 2011.        In 2012, MERS published a "Confirmatory

Assignment"     confirming   the   2008    assignment.     That     document

explained that the 2011 assignment was a nullity because, in 2011,

MERS did not have standing to assign the mortgage, given that it

had already transferred the mortgage to U.S. Bank in 2008.               In

2013, Wells Fargo, U.S. Bank's servicer of the loan, recorded an

affidavit in the registry of deeds attesting that, as of that time,

U.S. Bank held the note secured by Dyer's mortgage.

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            In April 2015, U.S. Bank notified Dyer that it intended

to foreclose on the Property by utilizing the statutory power of

sale provided for in Massachusetts General Laws Chapter 183 § 21.

That provision permits a proper party to execute a foreclosure

sale without prior judicial authorization.     Eaton v. Fed. Nat'l

Mortg. Ass'n, 969 N.E.2d 1118, 1127 (Mass. 2012). The requirements

for exercising that statutory power of sale are laid out in

Massachusetts General Laws Chapter 244 § 14. See Fed. Nat'l Mortg.

Ass'n v. Rego, 50 N.E.3d 419, 422-23 (Mass. 2016).

            Dyer filed suit in Massachusetts state court on May 26,

2015.    Dyer named U.S. Bank as one of the defendants.   She sought

a declaratory judgment that U.S. Bank is not a proper party under

Section 14 to utilize the statutory power of sale, and she also

sought damages against U.S. Bank for slander of title based on

that same allegation about the status of U.S. Bank under Section

14.     Dyer also named Wells Fargo, the servicer of the loan, as a

defendant in the suit.     In her claim against Wells Fargo, Dyer

sought damages under Massachusetts' catch-all consumer protection

statute, Massachusetts General Laws Chapter 93A.

            The defendants removed the case to the United States

District Court for the District of Massachusetts on the basis of

diversity jurisdiction.    In federal court, the parties consented

to proceeding before a magistrate judge pursuant to 28 U.S.C.

§ 636(c).     Dyer then filed a separate motion for a preliminary

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injunction to stop the foreclosure sale.      The Magistrate Judge

denied that motion.    The defendants thereafter filed a motion for

judgment on the pleadings pursuant to Federal Rule of Civil

Procedure 12(c).

             After a full round of briefing, the Magistrate Judge

granted the motion for judgment on the pleadings.     In so doing,

the Magistrate Judge dismissed all of Dyer's claims.      Dyer now

appeals.

                                 II.

             We start with the aspect of this appeal that concerns

U.S. Bank.    Dyer does not challenge the Magistrate Judge's ruling

that Dyer's slander of title claim rests on the same contention as

her request for a declaratory judgment: that U.S. Bank was not

authorized to exercise the statutory power of sale. Thus, we fully

resolve the U.S. Bank-related portion of Dyer's appeal so long as

we conclude that U.S. Bank was authorized to exercise the statutory

power of sale.1

             In contending that U.S. Bank was not authorized to

exercise the statutory power of sale, Dyer chiefly argues that

     1 Following the Magistrate Judge's order dismissing Dyer's
claims, the foreclosure sale occurred. Accordingly, we issued an
order requesting supplemental briefing as to whether Dyer's appeal
of the denial of her request for declaratory relief had been
rendered moot by that sale. Because that request for relief relies
on the same claim regarding U.S. Bank's status under Section 14 as
her request for damages for her slander of title claim, this appeal

                                - 4 -
U.S. Bank was not the holder of the mortgage when it purported to

exercise the statutory power of sale and that, in consequence of

the decision of the Supreme Judicial Court ("SJC") in Eaton, U.S.

Bank was not entitled to exercise that power.      See Eaton, 969

N.E.2d at 1131 (holding that, in order to foreclose under Section

14, an entity must both hold the mortgage and either hold the note

or act as an agent of the noteholder).     In so contending, Dyer

acknowledges that there was a purported 2008 assignment of the

mortgage from MERS to U.S. Bank.   Dyer acknowledges as well that

U.S. Bank referenced this assignment in the statutorily required

notice.   See Mass. Gen. Laws ch. 244 § 14.   But, Dyer contends,

that 2008 assignment was void for a number of reasons.   We do not

agree.

          Dyer first argues that the assignment was void because

MERS, when it made the 2008 assignment, was neither the noteholder

nor the agent of the noteholder.   Instead, MERS held the mortgage

only as a "nominee" for the lender, Dreamhouse, and its successors

and assigns.   But we held in Culhane v. Aurora Loan Services of

Nebraska, 708 F.3d 282 (1st Cir. 2013), 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

is not moot. McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207, 210
n.2 (1st Cir. 2012).

                              - 5 -
the lender to the lender's successors and assigns.      Id. at 293.

And here, Dyer's 2004 mortgage contract contains the same language

regarding MERS, and its status as nominee (in this case for

Dreamhouse), as the one that we addressed in Culhane.

          Dyer responds that Culhane is not controlling.          She

contends that Culhane relied on a construction of Section 14 that

pre-dated the SJC's decision in Eaton and that Eaton renders that

construction impermissible.   While Eaton did expressly reserve the

question of whether a "nominee" is an "agent" of the noteholder,

it did so only in connection with its discussion of whether MERS's

status as a "nominee" of the lender empowered it to execute the

statutory power of sale.      See Eaton, 969 N.E.2d at 1134 n.29.

Eaton in no way suggested that MERS's status as a nominee was

insufficient to permit it to hold or assign a mortgage to a

successor or assign of the lender.      And, in Culhane, in which we

expressly applied Eaton, Culhane, 708 F.3d at 288 n.4, we concluded

that MERS's status as a nominee was sufficient to permit it to

hold a mortgage and to make such an assignment.   Id. at 293.   Thus,

Dyer's first ground for contending that the 2008 assignment is

void is without merit in consequence of the language of the 2004

contract naming MERS as Dreamhouse's nominee.2

     2 Eaton holds that, even if the mortgage and the note had
previously been separated, a party may only exercise Section 14's
power of sale if at the time of the sale it holds both the mortgage
and the note. Eaton, 969 N.E.2d at 1129. In addition to contesting

                                - 6 -
           Moving past the terms of the 2004 mortgage contract,

Dyer goes on to contend that the 2008 assignment from MERS to U.S.

Bank is void for an independent reason.             She contends that MERS

assigned   the   mortgage   to   U.S.   Bank   in   violation   of   a   trust

agreement between U.S. Bank and the investors in the loan, which

empowered U.S. Bank to act on behalf of the investors, and that

the breach of the trust agreement rendered the assignment void.

But in Butler v. Deutsche Bank Trust Co. Americas, 748 F.3d 28, 37

(1st Cir. 2014), we held that an assignment made in contravention

of such a trust agreement is at most voidable at the option of the

parties to the trust agreement, not void as a matter of law.

Therefore, the alleged violation of the trust agreement does not

void the 2008 assignment and thereby strip U.S. Bank of its status

as a holder of the mortgage.       Thus, this argument, too, fails.

U.S. Bank's status as the mortgage holder in consequence of the
2008 assignment from MERS, Dyer separately challenges the
Magistrate Judge's finding that U.S. Bank also held the note. The
Magistrate Judge based that finding on both a copy of the note
endorsed in blank that U.S. Bank produced and a copy of the 2013
affidavit by Wells Fargo, U.S. Bank's agent and servicer of the
loan, stating that U.S. Bank held the note. Dyer provides no basis
for rejecting that finding beyond her conclusory contrary
assertion and a reference to an allonge, which she does not develop
into an argument that would warrant reversal of the Magistrate
Judge's finding. We thus treat as waived any argument that U.S.
Bank was not a proper party to execute the sale because, even if
U.S. Bank held the mortgage via the 2008 assignment from MERS, it
did not also hold the note. See United States v. Zannino, 895
F.2d 1, 17 (1st Cir. 1990).

                                   - 7 -
             Dyer next argues that the 2008 assignment is void for

yet another reason: the 2012 Confirmatory Assignment states that

MERS lacked "standing" to assign the mortgage.               That document,

however, makes clear that MERS lacked "standing" to assign the

mortgage in 2011, because MERS had validly assigned the mortgage

to U.S. Bank in 2008.        The Confirmatory Assignment thus hardly

casts doubt on the validity of the 2008 assignment to U.S. Bank;

in fact, it appears to confirm it.            We therefore reject this

argument as well.

             Finally, we reject Dyer's separate argument that U.S.

Bank was not a proper party to exercise the statutory power of

sale because the notice of sale that Section 14 required U.S. Bank

to publish did not comply with Section 14's requirements.               See

Mass. Gen. Laws ch. 244 § 14 (stating that "in the event a mortgagee

holds a mortgage pursuant to an assignment, no notice under this

section shall be valid unless (i) at the time such notice is

mailed, an assignment, or a chain of assignments, evidencing the

assignment of the mortgage to the foreclosing mortgagee has been

duly recorded in the registry of deeds for the county or district

where the land lies and (ii) the recording information for all

recorded assignments is referenced in the notice of sale required

in this section."). Specifically, she contends that notice failed

to   refer    to   what   Dyer   identifies   as   various    "intermediate

transfers."

                                    - 8 -
           Dyer's complaint is less than clear as to precisely what

she contends was being assigned in these "intermediate transfers,"

and her briefing does not do much to help clarify matters.                The

premise of this argument appears to be, however, that MERS, as the

nominee of Dreamhouse, never properly held the mortgage.              From

this premise, she contends that the notice published by U.S. Bank

had to set forth a chain of title that ran from Dreamhouse, the

original lender, to the various parties the complaint identifies

as being involved in "intermediate transfers" to U.S. Bank.

           The problem with this argument stems from its mistaken

premise. As we have explained, per our decision in Culhane, MERS's

status as nominee did not bar it from holding the mortgage.               See

Culhane, 708 F.3d at 291-92.     Thus, MERS was the record holder of

the mortgage in consequence of the mortgage that Dyer granted to

MERS as nominee for Dreamhouse in 2004.          Moreover, Dyer does not

allege   that   MERS   subsequently   assigned    the   mortgage   back    to

Dreamhouse or to any other entity prior to MERS's 2008 assignment

of the mortgage to U.S. Bank.

           Thus, even accepting as we must the factual allegations

in Dyer's complaint that there were what she calls "intermediate

transfers," she provides no basis for concluding that MERS did not

remain the sole record holder of the mortgage up until the time it

assigned that mortgage to U.S. Bank in 2008.            In fact, because

MERS continued to hold the mortgage all along, in keeping with the

                                 - 9 -
way in which the MERS system operates, Eaton, 969 N.E.2d at 1122

n.5, it appears that the intermediate transfers Dyer identifies in

her complaint were merely transfers of the "beneficial ownership

interest[]" in the mortgage among MERS members.   Id.3

          Against this background, the notice published by U.S.

Bank complied with Section 14 for a simple reason.       The notice

referenced the assignment (in 2008) from the record holder of the

mortgage, MERS, to U.S. Bank.   The notice thus did just what it

needed to do: it referenced "an assignment of the mortgage to the

foreclosing mortgagee" that "has been duly recorded in the registry

of deeds for the county or district where the land lies" and for

which "the recording information . . . [was] referenced in the

notice of sale required in this section."   Mass. Gen. Laws ch. 244

§ 14; cf. U.S. Bank Nat'l Ass'n v. Ibanez, 941 N.E.2d 40, 53 (Mass.

2011) ("A foreclosing entity may provide a complete chain of

assignments linking it to the record holder of the mortgage, or a

single assignment from the record holder of the mortgage.").

          In sum, none of Dyer's arguments as to why U.S. Bank was

not authorized to exercise the statutory power of sale under

     3 The SJC explained that MERS is the "mortgagee of record for
mortgage loans registered on the MERS electronic registration
system, which tracks servicing rights and beneficial ownership
interests in those loans; the system allows these servicing rights
and beneficial ownership interests to be traded electronically
between members without the need to record publicly each mortgage
assignment." Eaton, 969 N.E.2d at 1122 n.5.

                              - 10 -
Section 14 have merit.    We thus affirm the order dismissing her

slander of title claim.

                               III.

          In addition to Dyer's two claims against U.S. Bank, Dyer

also brought a claim against Wells Fargo.       In that claim, Dyer

sought damages under Massachusetts General Laws Chapter 93A.    That

statute prohibits "unfair or deceptive acts or practices in the

conduct of any trade or commerce."    Mass. Gen. Laws ch. 93A § 2(a).

The statute also requires that, thirty days before filing a claim

under Chapter 93A, a claimant must, as a general matter, send a

"written demand for relief" to the defendant, outlining the unfair

or deceptive act or practice and the injury suffered.    Id. § 9(3).

          Dyer alleged in her complaint that the suit itself served

as the demand letter required by Chapter 93A. The Magistrate Judge

rightly held that the suit could not serve to fulfill the demand

letter requirement, because the demand letter must be sent prior

to filing suit.   See id.; Rodi v. S. New England Sch. of Law, 389

F.3d 5, 19 (1st Cir. 2004).     Accordingly, the Magistrate Judge

ruled that the claim must be dismissed.

          On appeal, Dyer contends for the first time that she was

not required to send a demand letter at all.       She relies on the

exception to the demand letter requirement set forth in section

9(3) of Massachusetts General Laws Chapter 93A.        The exception

provides that "[t]he demand requirements of this paragraph shall

                              - 11 -
not apply if . . . the prospective respondent does not maintain a

place       of    business      or     does      not     keep     assets    within      the

[C]ommonwealth."

                 Dyer contends that Moronta v. Nationstar Mortgage, LLC,

41 N.E.3d 311, 315 n.11 (Mass. App. Ct. 2015), makes clear that

this exception applies so long as the putative defendant does not

maintain         both    a   place     of     business    and     assets    within      the

Commonwealth.           And she contends that Wells Fargo has no assets in

the Commonwealth.            The defendants respond that Moronta sets forth

that proposition about the exception's disjunctive nature only in

dicta and that this dicta is in conflict with our prior decision

in McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207, 218 (1st Cir.

2012).

                 Dyer did not argue below, however, that she did not need

to comply with the demand letter requirement.                         We thus treat as

waived her newly raised argument about whether the exception to

the demand letter requirement applies. See Malave v. Carney Hosp.,

170    F.3d      217,    222    (1st    Cir.     1999)    ("[E]xcept       in   the    most

extraordinary circumstances (not present here), matters not raised

in    the    trial      court   cannot      be   hawked    for    the   first    time    on

appeal.").          And,     given     that   Dyer     does     not   dispute   that    her

complaint failed to plead that she had sent a demand letter prior

to filing suit, we affirm the order dismissing Dyer's Chapter 93A

claim.

                                            - 12 -
                              IV.

          For the foregoing reasons, we affirm the dismissal of

Dyer's claims.

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