Serra v. Quantum Servicing, Corp.

United States Court of Appeals
For the First Circuit

No. 13-1557

JOHN P. SERRA, II,

Plaintiff, Appellant,

v.

QUANTUM SERVICING, CORP., WELLS FARGO BANK, N.A.,
TRUSTEE FOR RMAC PASS-THROUGH TRUST, SERIES 2010-A,

Defendants, Appellees,

EQUIFIRST CORPORATION,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]

Before
Torruella, Circuit Judge,
Souter,* Associate Justice,
and Thompson, Circuit Judge.

Glenn F. Russell, Jr., with whom Glenn F. Russell, Jr. &
Associates, P.C., was on brief for appellant.
Reneau J. Longoria, with whom Stephen M. Valente and Doonan,
Graves & Longoria, LLC, were on brief for appellees.

March 31, 2014

*
The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
 TORRUELLA, Circuit Judge. John P. Serra, II ("Serra")

asserts that his property was wrongfully sold at foreclosure by a

party without any valid legal interest in his mortgage. He also

extends claims in wrongful foreclosure and unfair business

practices against an earlier mortgage holder that tried,

unsuccessfully, to foreclose. All of these claims are predicated

on a theory that Mortgage Electronic Registration Systems, Inc.

("MERS") lacked the authority to transfer Serra's mortgage. This

court, however, has expressly adopted a contrary view of MERS's

legality, and stare decisis is a hurdle far too high for Serra to

surmount.

Additionally, Serra claims that subsequent mortgage

assignees may incur liability for the allegedly predatory loan

terms crafted by his original lender and that his right to

rescission was improperly cut short by the sale of his property.

Because a review of relevant Massachusetts law shows that these

claims are similarly lacking, we affirm.

I. Background

On May 2, 2007, Serra refinanced his residential home

mortgage, taking out a $276,250 loan from EquiFirst Corporation

("EquiFirst")1 secured by his Bellingham, Massachusetts home. The

1
Serra's original complaint named three defendants: EquiFirst,
Quantum, and Wells Fargo. A failure to timely serve EquiFirst,
however, led to its dismissal from the case without prejudice on
June 17, 2011. Notwithstanding that dismissal, Serra's twice-
amended complaint continued to list EquiFirst as defendant. In

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mortgage listed MERS as "nominee" for EquiFirst and as the

"mortgagee" of record. According to Serra, the terms of this

mortgage loan were both structurally unfair and knowingly against

his best interest, in violation of Massachusetts law.

The Serra mortgage underwent a series of assignments

beginning on April 7, 2009, when MERS transferred the mortgage to

Barclays Bank, PLC. Barclays immediately transferred the mortgage

onwards and, by November 25, 2009, it had been assigned to Quantum

Servicing Corp. ("Quantum"). On June 1, 2011, Quantum undertook an

additional assignment, transferring the mortgage to Wells Fargo

Bank, N.A. as Trustee for RMAC Pass-Through Trust, Series 2010-A

("Wells Fargo"). Quantum remained the loan's servicer.

In October 2010, Serra sent a letter to Quantum -- then

acting as servicer for Wells Fargo -- seeking to rescind his

mortgage under the Massachusetts Consumer Credit Cost Disclosure

Act ("MCCCDA"). Namely, Serra alleged that a $244.48 credit

reporting fee was far above the accepted $50.00 market rate,

amounting to a statutory violation sufficient for rescission.

Quantum's response letter posed two questions: (1) could Serra

tender the loan proceeds in full, and (2) could Serra provide

documentation proving rescission was warranted. Quantum never

substance, however, these amended complaints alleged no claims
against, and sought no relief from, EquiFirst. The district court
thus determined that the sole defendants were effectively Quantum
and Wells Fargo -- a determination Serra does not challenge on
appeal.

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received a response to these inquiries, and subsequently, Wells

Fargo sold Serra's property at foreclosure.

Serra's suit, originally brought in state court, was

removed on the basis of diversity. Having conducted a foreclosure

sale and believing it was owed a deficiency judgment, Wells Fargo

counterclaimed before the district court for breach of contract and

possession of the foreclosed property. Summary judgment as to all

claims was eventually entered in favor of Wells Fargo and Quantum,

precipitating this appeal.

II. Discussion

Because this appeal is before us as a result of the

district court's grant of summary judgment, our review is de novo,

and we interpret all facts on the record in support of the

nonmoving party below. Bos. Prop. Exch. Transfer Co. v. Iantosca,

720 F.3d 1, 9 (1st Cir. 2013). All reasonable inferences that may

be extrapolated from the record are drawn in favor of the non-

movant, but allegations of a merely speculative or conclusory

nature are rightly disregarded. Suárez v. Pueblo Int'l, Inc., 229

F.3d 49, 53 (1st Cir. 2000). We affirm the district court's grant

of summary judgment if, after undertaking this independent review,

we agree that there exists no genuine dispute as to any material

fact and that the movant is entitled to judgment as a matter of

law. Fed. R. Civ. P. 56(a); McCarthy v. Nw. Airlines, Inc., 56

F.3d 313, 315 (1st Cir. 1995).

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A. MERS's Ability to Transfer Serra's Mortgage

Serra brings claims for wrongful foreclosure against

Quantum and Wells Fargo. He also seeks to prove that Quantum

engaged in unfair or deceptive business practices. Mass. Gen. Laws

ch. 93A ("Chapter 93A"). Because these claims are predicated on

the same erroneous legal theory, we review and dismiss them

together.

In short, Serra claims that the MERS business model,

under which MERS possesses a bare legal interest in a mortgage,

transferable among MERS member institutions, is contrary to

Massachusetts law. As a consequence, Serra theorizes, MERS lacked

legal authority to transfer the Serra mortgage, rendering both its

initial assignment and all subsequent transfers of the mortgage

invalid.

This argument willfully disregards our holding in Culhane

v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013). In

Culhane, we ruled unequivocally that MERS may validly possess and

assign a legal interest in a mortgage. Id. at 292-93. Far from

finding it contrary to law, we remarked that "MERS's role as

mortgagee of record and custodian of the bare legal interest as

nominee . . . fit[s] comfortably within the structure of

Massachusetts mortgage law." Id. at 293; see also Woods v. Wells

Fargo Bank, N.A., 733 F.3d 349, 355 (1st Cir. 2013) (applying

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Culhane to find that "MERS, as the mortgagee of record, possessed

the ability to assign [the] mortgage").

Indeed, Serra conceded at oral argument that Culhane

invalidates his claims and offered only the suggestion that we

disregard the case in reaching our decision, given that the

Massachusetts Supreme Judicial Court has not ruled expressly on

this issue of state law.2 Of course it is true that Culhane

resolved an issue of Massachusetts law, and thus it could

theoretically be displaced by a contrary ruling arising from the

Massachusetts Supreme Judicial Court. See Blinzler v. Marriot

Int'l, Inc., 81 F.3d 1148, 1151 (1st Cir. 1996). In the absence of

any such contrary holding, however, Culhane unquestionably binds

this court: under Massachusetts law, MERS may validly possess and

transfer a legal interest in a mortgage. See Arizona v. Rumsey,

467 U.S. 203, 212 (1984) ("[A]ny departure from the doctrine of

stare decisis demands special justification.").

As presciently stated in Culhane itself, where litigants

attempt to repackage "old wine in a new bottle . . . we see no

point in decanting it again." Culhane, 708 F.3d at 294. Put

2
Serra also urges us to disregard Culhane on the theory that the
appellant's briefs in that case were of poor quality. Whatever the
veracity of that claim, it has no effect on the binding nature of
our precedent and, moreover, it certainly did not impede this court
in Culhane from conducting a thorough and convincing analysis of
Massachusetts law. As this claim is forwarded here by a litigant
whose own briefs exhibit a grave dearth of developed argumentation,
we are also reminded that counsel in glass houses ought not throw
stones.

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simply, Serra's theory has been foreclosed. The grant of summary

judgment as to Serra's wrongful foreclosure and Chapter 93A claims

is affirmed.

B. Claims Based on Assignee Liability

Serra next seeks to have Quantum and Wells Fargo answer

for what he believes are structurally unfair loan terms and

predatory lending practices engaged in by EquiFirst. See Mass.

Gen. Laws ch. 93A, § 2; id. ch. 183, § 28C (the "Borrower's

Interest Act"). We need not explore whether the loan terms were in

fact unlawful. Rather, because both his Chapter 93A claim for

damages and his Borrower's Interest Act claim for equitable relief

rise and fall on a common, mistaken, theory of assignee liability,

we consider them in tandem.

Serra's argument rests solely on a recent Massachusetts

Supreme Judicial Court case, Drakopoulos v. U.S. Bank Nat'l Ass'n,

465 Mass. 775, 991 N.E.2d 1086 (2013), which he believes

establishes assignee liability for his statutory claims. An

independent review of Drakopoulos, however, reveals this argument's

erroneous underpinnings.

The plaintiffs in Drakopoulos brought six claims, three

of which are relevant here. While two of these claims matched

Serra's own, arising under Chapter 93A and the Borrower's Interest

Act, the third arose under the Predatory Home Loan Practices Act

("PHLPA"), Mass. Gen. Laws ch. 183C. See Drakopoulos, 991 N.E.2d

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at 1091. As recognized by the Supreme Judicial Court, PHLPA's text

expressly includes a broad grant of assignee liability. Id. at

1092 n.11; see also Mass. Gen. Laws ch. 183C, § 15(a) ("Any person

who purchases or is otherwise assigned a high-cost home mortgage

loan shall be subject to all affirmative claims and any defenses

with respect to the loan that the borrower could assert against the

original lender . . . ."). Thus, PHLPA expands the common law of

assignee liability in the limited instance of certain "high cost"

loans. Drakopoulos, 991 N.E.2d at 1092 ("To the extent that the

bank may [] have liability as an assignee by virtue of the act, it

would extend to . . . statutory [Chapter 93A and Borrower's

Interest Act claims, as well]." (emphasis added)).

In relying on Drakopoulos, Serra fails to acknowledge

that his complaint alleged no violation of PHLPA,3 and thus cannot

receive the advantage of that act's broad grant of assignee

liability. Moreover, neither Chapter 93A nor the Borrower's

Interest Act serves as an independent ground for extending

liability to Serra's claims. See id. at 1095 n.16 ("Where an

assignee played no part in the unfair or deceptive acts of an

3
Beyond never referencing PHLPA, Serra did not plead facts
sufficient to show his was a "high cost" loan. PHLPA specifically
defines such loans as those in which: (1) the annual percentage
rate "exceed[s] by more than 8 percentage points for first-lien
loans, or more than 9 percentage points for subordinate-lien loans,
the yield on United States Treasury securities," or (2) "the total
points and fees exceed the greater of 5 per cent of the total loan
amount or $400." Mass. Gen. Laws ch. 183C, § 2.

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assignor, principles of assignee liability ordinarily will not

render the assignee liable for affirmative damages for those

acts."); id. at 1097 n.20 ("[But for PHLPA], an assignee who took

no part in the making of a home loan would not fall within the

scope of liability of the Borrower's Interest Act.").

In the absence of such statutorily created liability,

Serra cannot hold Quantum and Wells Fargo responsible for the

allegedly predatory practices of their predecessor-in-interest.

Ford Motor Credit Co. v. Morgan, 404 Mass. 537, 545, 536 N.E.2d

587, 591 (1989)("The common law principle that the assignee stands

in the assignor's shoes means only that the debtor can raise the

same defenses against the assignee as he could have raised against

the assignor."). The district court's grant of summary judgment on

these claims is affirmed.

C. Serra's Right to Rescind

Serra also seeks the post-foreclosure-sale rescission of

his mortgage and, in the alternative, damages for the disregard of

his initial rescission request, which predated the sale of his

property. This claim for rescission is predicated on an alleged

violation of MCCCDA § 10(i)(2), which holds that the under-

reporting of a finance charge by more than $35.00 may amount to a

statutory violation. That is, while Serra paid $244.48 for a

credit report, he alleges that the reasonable market rate was never

more than $50.00. This $194.48 difference, he claims, was

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improperly excluded from the calculation of his finance charge,

resulting in the understatement of the amount financed and annual

percentage rate.

The district court granted summary judgment on this

claim,4 finding that the right to rescind is unequivocally cut off

by a subsequent foreclosure sale and that, although Serra sought

rescission prior to sale, this unilateral act was insufficient to

effectuate such rescission, meaning the right was unexercised when

it terminated at the time of sale. Damages, the district court

held, could be available for the failure of a mortgage holder to

duly undertake consideration of a rescission request. Nonetheless,

concluding that Serra's purported basis for rescission was without

merit, the district court refused to award such damages here.

We need not retread each step along the district court's

detailed analytical path, for its eventual conclusion neatly

highlights the fatal flaw in Serra's claim. That is, having failed

4
Serra appears to suggest that the district court's conclusion
wrongly relied on precedent interpreting the Federal Truth in
Lending Act ("TILA"). In fact, MCCCDA was intentionally
constructed to align with TILA, see Lynch v. Signal Fin. Co. of
Quincy, 367 Mass. 503, 505, 327 N.E.2d 732, 734 (1975), and
"[w]here the Massachusetts Legislature in enacting a statute
follows a Federal statute, the Massachusetts courts follow the
adjudged construction of the Federal statute by the Federal
courts," In re Fuller, 642 F.3d 240, 243 (1st Cir. 2011)
(alterations omitted)). Thus, in dispatching its duty to
faithfully forecast what a Massachusetts court would do if
presented with this case, see Blinzler, 81 F.3d at 1151, the
district court correctly turned to our own TILA precedent for
guidance, Mayo v. Key Fin. Servs., Inc., 424 Mass. 862, 864, 678
N.E.2d 1311, 1313 (1997).

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to sufficiently plead any valid basis to rescind his mortgage loan

at any time, Serra has presented no genuine issue of material fact

sufficient to require this court to delve into the remainder of his

claims regarding the precise scope and duration of his rescission

rights.

Although it may be, arguendo, that a spurious $194.48

charge would -- on a different record -- suffice to establish an

MCCCDA violation for which rescission might lie, Serra has failed

to provide any evidentiary support for the claim that $50.00 was

the appropriate market rate. In fact, having reviewed the full

record, the sole reference to $50.00 as the accepted rate is found

in Serra's pleadings. This, without more, is insufficient to

survive summary judgment. Transurface Carriers, Inc. v. Ford Motor

Co., 738 F.2d 42, 46 (1st Cir. 1984) (finding no genuine issue of

material fact where a party offered "no more than argument,"

unsupported by "affidavits, deposition, or other appropriate

materials raising a question of fact" (internal citation omitted)).

If factual, Serra must necessarily have derived this

$50.00 figure from some verifiable source, but -- for reasons

unknown -- he decided to leave the record bereft of any and all

supporting proof. In contrast, Wells Fargo and Quantum offer an

affidavit from the credit reporting agency, with accompanying

invoice, attesting that the full $224.48 was a true and reasonable

fee for services. We offer no comment on the actual validity of

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that amount, but on the record before us we see no genuine issue of

material fact in dispute. Having chosen to rest on the laurels of

bald allegation, Serra leaves us no choice but to affirm the grant

of summary judgment. Ruiz-Rosa v. Rullán, 485 F.3d 150, 156 (1st

Cir. 2007) ("Allegations made in a plaintiff's complaint, standing

alone, are not enough to oppose a properly supported motion for

summary judgment.").

D. Wells Fargo's Counterclaims

The final issue remaining on appeal is Serra's claim that

summary judgment was wrongly awarded to Wells Fargo on its

counterclaims for breach of contract and possession.

As to breach of contract, we note that Serra dedicates

less than five lines of his appellate brief to this issue and

offers only the theory that summary judgment is inappropriate given

the "erroneous application of the law described [elsewhere in his

brief.]" Even were such briefing not ripe for a finding of waiver,

see Mass. Sch. of Law at Andover, Inc. v. American Bar Ass'n, 142

F.3d 26, 43 (1st Cir. 1998), we have identified no such "erroneous

application" of law and thus see no viable grounds to disturb the

district court's finding.

The claim regarding possession gives us no greater pause,

as Serra now forwards arguments which were never raised below, and

are thus barred by our waiver doctrine. Sands v. Ridefilm Corp.,

212 F.3d 657, 663 (1st Cir. 2000). In fact, before the district

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court, Serra argued only that Wells Fargo had to prove strict

compliance with Massachusetts' statutory foreclosure requirements,

Mass. Gen. Laws ch. 244, § 14, and the governing documents of the

RMAC Pass-Through Trust, Series 2010-A. Now, he abandons that

argument in favor of the suggestion that mere adherence to those

statutory requirements and trust documents is insufficient, a party

must further bring a claim for "summary process" under Mass. Gen.

Laws ch. 239.

Even were this argument not waived, it is clear that

"summary process" is not the exclusive means by which a foreclosing

entity make seek possession of real property in Massachusetts. See

Mass. Gen. Laws ch. 184, § 18 ("No person shall attempt to recover

possession of land . . . other than through an action brought

pursuant to chapter two hundred and thirty-nine or such other

proceedings authorized by law." (emphasis added)). Having failed

to articulate any clear theory as to why a properly filed

counterclaim before the district court would not constitute such an

alternative means to establish possession, Serra's claim must fail.

III. Conclusion

In the absence of a dispute of law or fact sufficient to

survive summary judgment, we affirm.

Affirmed.

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