Sheedy v. Deutsche Bank National Trust Co.

United States Court of Appeals
For the First Circuit

No. 14-1246

IN RE: LAURA SHEEDY,

Debtor.

LAURA SHEEDY,

Plaintiff, Appellant,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee;
and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

Defendants, Appellees.

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

[Hon. George A. O'Toole, U.S. District Judge]

Before

Howard, Chief Judge,
Torruella and Kayatta, Circuit Judges.

David G. Baker, for appellant.
Donn A. Randall, with whom Carol E. Kamm, Jamie L. Kessler and
Bulkley, Richardson and Gelinas, LLP, were on brief, for appellees.

September 1, 2015
 TORRUELLA, Circuit Judge. This case involves an attempt

by a Chapter 13 debtor to avoid foreclosure on her residential

mortgage through a lender liability suit in an adversary proceeding

within her bankruptcy case. Agreeing with the bankruptcy court, we

find all claims to be either time-barred or without merit, and

therefore affirm its grant of summary judgment in favor of the

creditors.

I. Background

A. The Loan and Mortgage

We review the facts in the light most favorable to

Debtor-Appellant Laura Sheedy, the party opposing summary judgment.

See Rosaura Bldg. Corp. v. Municipality of Mayagüez, 778 F.3d 55,

58 (1st Cir. 2015) (citing Agusty–Reyes v. Dep't of Educ. of P.R.,

601 F.3d 45, 48 (1st Cir. 2010)); In re Iannochino, 242 F.3d 36, 39

(1st Cir. 2001) (applying the same standard in a bankruptcy

appeal). Sheedy and her husband are self-employed and have worked

in various real estate businesses. She considers herself

"relatively sophisticated in real estate matters (but not

finance)," and she has held a real estate broker license since the

early 1980s.

In 1987, Sheedy and her husband purchased a residence in

Lexington, Massachusetts. Over the years, the couple continually

transferred the property's title amongst themselves and the

Cardinal Trust (the "Trust") -- in which Sheedy holds a beneficial

-2-
interest and is also the trustee -- with the purpose of refinancing

or using loan proceeds for other legitimate purposes. In one such

transaction in 2003, she conveyed title from the Trust to herself.

Then, in 2004, she refinanced the property (the "2004

Transaction"). For the 2004 Transaction, Sheedy executed a

promissory note (the "Note") for $810,000 in favor of Washington

Mutual Bank ("WAMU"). A mortgage corresponding to the 2004

Transaction (the "Mortgage") was also given to WAMU and was

properly recorded on April 21, 2004.

The Note provided for an interest rate of 3.625% for five

years. Then, the interest rate was set to change annually by

adding 2.75% to the weekly average yield on United States Treasury

securities adjusted to a constant maturity of one year, based on an

index issued by the Federal Reserve Board. Whatever the resulting

rate was under that formula, the terms of the Note required that it

be between 2.75% and 8.625%. Additionally, after the first

adjustment following the initial five-year period, all other

changes could not be by increments of more than 2%. The initial

monthly payment under the Note was $4,109.56, but the terms of the

Note were amended in an addendum so that Sheedy would only pay

interest during the first five years. This resulted in Sheedy only

having to pay $2,446.87 monthly for the first five years.

In 2008, federal regulators closed WAMU and the Federal

Deposit Insurance Corporation ("FDIC") was named receiver.

-3-
JPMorgan Chase National Association ("Chase") acquired certain WAMU

assets from the FDIC, including an assignment of the Mortgage.

Chase then assigned the Mortgage to Deutsche Bank National Trust

Company ("Deutsche Bank," and, together with Chase, the "Secured

Creditors"), as Trustee for WAMU Mortgage Pass-Through Certificates

Series 2004-AR4 (the "Securitized Trust"). Chase continued

servicing the loan.

In 2009, by the time the first adjustment in payment was

scheduled, Sheedy was current in her loan but faced a decline in

business as the recession began. The monthly payment jumped to

$4,055.05 -- an amount slightly less than the number provided by

the terms of the Note, ignoring the initial interest-only period

granted under the addendum. Sheedy could not meet the new payments

and she fell into default.

Sheedy retained MFI-Miami -- a mortgage fraud

investigation firm that does not engage in the practice of law --

to analyze her loan documents and determine whether she had been

misled as to the terms of the Note and Mortgage. MFI-Miami

provided her with a "comprehensive analysis" of the 2004

Transaction. The report stated that "[t]here are serious problems

with the way this loan was originated . . . which were committed by

the lender. It contains elements of illegal bait and switch and

deception practices." For example, the report mentioned that the

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Truth in Lending statement1 differs from the terms of the Note

because it stated that the payment beginning on the sixty-first

month, i.e., at the time of the first adjustment, would be

$4,331.44. Thus, Sheedy had been told by WAMU that the first

payment due after the adjustment would in fact be higher than what

the Note itself reflected, and even higher than what she was

actually required to pay when the adjustment occurred. Also, the

Truth in Lending statement did not disclose that the payments for

the first five years would only include interest and no principal

would amortize.

B. The Bankruptcy Case

On June 8, 2010, after Deutsche Bank commenced

foreclosure proceedings, Sheedy filed for protection under Chapter

13 of the Bankruptcy Code, 11 U.S.C. § 1301 et seq. Then, on

July 20, 2010, she filed a Chapter 13 plan pursuant to 11 U.S.C.

§ 1321. As part of her plan, Sheedy raised a series of allegations

of lender liability, including that the Mortgage was rescindable

under the Truth in Lending Act, 15 U.S.C. §§ 1601-1667f ("TILA"),

and that the Secured Creditors violated Massachusetts General Laws

Chapter 93A, §§ 1-11 ("Chapter 93A"), as well as "general

principles of equity under Massachusetts law" as stated by the

1
Pursuant to Subpart C of Regulation Z of the Federal Reserve
Board, a lender in a refinancing transaction is required to provide
a disclosure statement containing, among other data, the payment
schedule, the variable rates, and the total payments on the
remaining obligation. 12 C.F.R. §§ 226.18, 226.20.

-5-
Massachusetts Supreme Judicial Court in Commonwealth v. Fremont

Inv. & Loan, NO. 07-4373, 2008 WL 517279 (Mass. Super. Feb. 26,

2008), aff'd as modified, 897 N.E.2d 548 (Mass. 2008). The plan

also proposed that, after rescission, the principal owed under the

Mortgage be treated as an unsecured claim of Sheedy's. That is,

instead of tendering the full amount of the loan in exchange for

the Mortgage as if the 2004 Transaction had never occurred, Sheedy

would only pay a fraction, as she would for all other unsecured

claims.

Deutsche Bank filed a proof of claim (the "Secured

Claim") preserving its status as a secured creditor in the amount

of $842,908.47 due under the Mortgage, and objecting to the

confirmation of the plan.2 On April 26, 2011, Sheedy filed the

instant adversary proceeding to have the bankruptcy court resolve

her lender liability claims, adding that Deutsche Bank and Chase

were also liable for fraud, deceit, and misrepresentation on the

basis that WAMU provided her with inaccurate or false information

concerning the terms of the Note and the Mortgage. Sheedy also

objected to the Secured Claim and challenged Deutsche Bank's

standing as her creditor. The Secured Creditors denied the

allegations and, following discovery, filed a motion for summary

judgment.

2
The Secured Claim was later transferred to Chase.

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C. The Bankruptcy Court Judgment

The bankruptcy court granted summary judgment in favor of

the Secured Creditors and issued a memorandum explaining the bases

for its decision. In re Sheedy, 480 B.R. 204 (Bankr. D. Mass.

2012). As to the TILA claim, the bankruptcy court held that it was

time-barred since Sheedy first brought this claim within the

bankruptcy case in 2010. The statute of limitations for claims for

rescission under TILA varies depending on the circumstances, but is

-- at most -- three years after the extension of credit. 15 U.S.C.

§ 1635(f). The 2004 Transaction occurred in April 2004. Thus, any

attempt to rescind was initiated well after the right was

extinguished by the statute of limitations.

Regarding the Chapter 93A claim, the bankruptcy court

found that Sheedy failed to send a written demand prior to

commencing suit and that she failed to even specify under which

section of Chapter 93A her claim arose.3 It concluded that the

Chapter 13 plan by itself did not constitute a demand as required

by Massachusetts General Laws Chapter 93A, § 9, and the applicable

3
We note that Sheedy's verified complaint in the adversary
proceedings perfunctorily alleges that her claim under Chapter 93A
is based upon the facts that: (1) there was a TILA violation; (2)
she had demanded rescission in her Chapter 13 plan; (3) "Deutsche
Bank obtained the loan at the time when it was in default"; (4)
Chase is a servicing agent of Deutsche Bank, and thus the latter is
liable for the actions of the former on agency grounds; and (5) the
acts of Deutsche Bank through Chase were "unfair and deceptive"
within the meaning of Chapter 93A. There is no further discussion
as to why this constituted a violation of Chapter 93A.

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statute of limitations had run because actions arising under

Chapter 93A "shall commence only within four years next after the

cause of action accrues." Mass. Gen. Laws ch. 260, § 5A. Since

the 2004 Transaction in which the alleged unfair and deceptive

practices occurred closed in April 2004, the statute of limitations

for Sheedy's Chapter 93A claims ran out in April 2008.

With respect to Sheedy's claim that the 2004 Transaction

was also the result of fraud, deceit, or misrepresentation, as WAMU

provided her with inaccurate or false information concerning the

terms of the loan, the bankruptcy court held that Sheedy failed to

plead the fraud allegations with particularity. The bankruptcy

court added that it would have reached that conclusion even if it

had taken into consideration the allegations contained in the

report prepared by MFI-Miami.4 Besides the insufficiency of the

4
Sheedy introduced the report and incorporated it by reference
into the allegations in her complaint. The bankruptcy court struck
the report from the record on the grounds that Sheedy failed to
state the preparer's qualifications as an expert pursuant to
Federal Rule of Evidence 702. See Poulis-Minott v. Smith, 388 F.3d
354, 359 (1st Cir. 2004) ("Federal Rule of Evidence 702 provides
that an expert must be qualified to testify based on the expert's
knowledge, skill, experience, training or education. It is the
responsibility of the trial judge to act as gatekeeper and ensure
that the expert is qualified before admitting expert testimony."
(citing Correa v. Cruisers, a Div. of KCS Int'l, Inc., 298 F.3d 13,
24 (1st Cir. 2002))). Sheedy included the bankruptcy court's
refusal to admit this evidence as an issue in her summary of the
facts on appeal, but failed to develop any arguments, which is
sufficient ground for us not to consider the issue. See United
States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[I]ssues
adverted to in a perfunctory manner, unaccompanied by some effort
at developed argumentation, are deemed waived."). Furthermore, we
would give deference to the bankruptcy court's decision, because

-8-
pleadings, the bankruptcy court held that Deutsche Bank and Chase

established that the FDIC retained liability relating to borrowers'

claims pursuant to the Purchase and Assumption Agreement between

the FDIC, as receiver of WAMU, and Chase. That is, Chase never

assumed any lender liability of WAMU.5

With regard to Sheedy's objection to the Secured Claim on

the basis that the Secured Creditors failed to explain how the

costs and fees included in the amount claimed were "reasonable and

necessary," the bankruptcy court concluded that Sheedy's claim was

imprecise and that Sheedy had been provided sufficient information

in the form of invoices, bills, checks, and receipts to enable her

to specify which costs and fees were unreasonable and unnecessary.

Sheedy did not set forth the specific grounds for her objection and

failed to meet her burden.

Finally, the bankruptcy court held that Deutsche Bank had

standing to initiate foreclosure proceedings against Sheedy because

"[t]he trial court has broad discretionary powers in qualification
of experts, and that court's decision will be affirmed unless there
is clear error." Poulis-Minott, 388 F.3d at 360 (alteration
omitted) (internal quotation marks and citation omitted). In any
event, even if we were to consider the report, we would still
affirm the dismissal of all claims, for the reasons explained
below.
5
See Yeomalakis v. F.D.I.C., 562 F.3d 56, 60 (1st Cir. 2009)
("When Washington Mutual failed, Chase Bank acquired many assets
but its agreement with the FDIC retains for the FDIC any liability
associated with borrower claims for payment of or any liability to
any borrower for monetary relief, or that provide for any other
form of relief to any borrower." (citations and internal quotation
marks omitted)).

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it submitted evidence that it holds the Note, which was endorsed in

blank and without recourse by WAMU, and thus is payable to the

bearer. In reaching this conclusion, the bankruptcy court

dismissed Sheedy's claims that the Mortgage was not validly

assigned to the Securitized Trust under the terms of the Pooling

and Service Agreement ("PSA") because the Mortgage was assigned in

2010 but the Securitized Trust had been formed in 2004.

Sheedy challenged this decision before the district

court, which then affirmed the bankruptcy court.6 This appeal

followed.

II. Discussion

A. Standard of Review and Summary Judgment

When reviewing the order of a district court affirming a

bankruptcy court's judgment, we "independently examine the

bankruptcy court's decision, reviewing findings of fact for clear

error and conclusions of law de novo." In re Nosek, 544 F.3d 34,

43 (1st Cir. 2008) (alteration omitted) (quoting In re Northwood

Props., LLC, 509 F.3d 15, 21 (1st Cir. 2007)); In re SPM Mfg.

Corp., 984 F.2d 1305, 1310-11 (1st Cir. 1993). Thus, we cede no

deference to the determinations made by the district court in its

review, "but assess the bankruptcy court's decision directly."

6
Sheedy v. Deutsche Bank Nat'l Tr. Co., No. 12–12302, 2014 WL
691612 (D. Mass. Feb. 21, 2014).

-10-
In re Am. Cartage, Inc., 656 F.3d 82, 87 (1st Cir. 2011) (citing In

re Carp, 340 F.3d 15, 21 (1st Cir. 2003)).

A party requesting summary judgment is entitled to it

when there is "no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law." Fed. R. Civ.

P. 56(a); see also Perry v. Roy, 782 F.3d 73, 77-78 (1st Cir.

2015). "In bankruptcy, summary judgment is governed in the first

instance by [Federal Rule of] Bankruptcy [Procedure] 7056. By its

express terms, the rule incorporates into bankruptcy practice the

standards of Rule 56 of the Federal Rules of Civil Procedure."

In re Varrasso, 37 F.3d 760, 762 (1st Cir. 1994) (citing Fed. R.

Bankr. P. 7056); see also In re Moultonborough Hotel Grp., LLC, 726

F.3d 1, 4 (1st Cir. 2013) ("The legal standards traditionally

applicable to motions for summary judgment . . . apply without

change in bankruptcy proceedings.").

In this process of evaluating a grant of summary

judgment, "we are not straitjacketed by the [bankruptcy] judge's

reasoning -- quite the contrary, we are free to uphold the court's

order on any basis present in the record." AJC Int'l, Inc. v.

Triple-S Propiedad, 790 F.3d 1, 3 (1st Cir. 2015) (alterations

omitted) (citing Stor/Gard, Inc. v. Strathmore Ins. Co., 717 F.3d

242, 247 (1st Cir. 2013)).

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B. The TILA Claim

Congress enacted TILA "to assure a meaningful disclosure

of credit terms so that the consumer will be able to compare more

readily the various credit terms available . . . and avoid the

uninformed use of credit, and to protect the consumer against

inaccurate and unfair credit billing . . . ." Beach v. Ocwen Fed.

Bank, 523 U.S. 410, 412 (1998) (quoting 15 U.S.C. § 1601(a)). TILA

allows consumers to obtain specific disclosures on charges, fees,

interest rates, and their rights under the loan. Id. (citing 15

U.S.C. §§ 1631, 1632, 1635, 1638). One such right a consumer has

under TILA is the right to rescind the loan if the lender fails to

deliver certain forms and to disclose important terms accurately,

provided that the loan is secured by the borrower's principal

dwelling. See 15 U.S.C. § 1635.

The parties agree that the 2004 Transaction is subject to

TILA.7 Sheedy argues that the TILA disclosures she received did

not comply with Regulation Z because some of the amounts disclosed

turned out to be inaccurate and because her husband never received

any disclosures. According to Sheedy, the consequence of her

husband not receiving these disclosures is that the 2004

Transaction is subject to rescission under 15 U.S.C. § 1635(a).

7
Pursuant to 15 U.S.C. § 1633, the Board of Governors of the
Federal Reserve System has exempted some credit transactions in
Massachusetts that are instead regulated under Massachusetts
General Laws Chapter 140D, § 10(a). See In re Smith-Pena, 484 B.R.
512, 517 (Bankr. D. Mass. 2013); 12 C.F.R. § 226.29.

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Additionally, Sheedy argues that the Secured Creditors cannot avoid

liability under TILA by relying on disclosures given as part of the

loan obtained when she transferred the property to herself in 2003

because, being a refinancing transaction, the 2004 Transaction

required additional disclosures beyond the ones already received by

her in 2003. See 12 C.F.R. § 226.20(a) ("A refinancing is a new

transaction requiring new disclosures to the consumer.").

We conclude, however, that Sheedy's TILA claim is time-

barred and there is no controversy as to the applicable statue of

limitations.8 Under TILA, a consumer's

right of rescission shall expire three years
after the date of consummation of the
transaction or upon the sale of the property,
whichever occurs first, notwithstanding the
fact that the information and forms required
under this section or any other disclosures
required under this part have not been
delivered to the obligor . . . .

15 U.S.C. § 1635(f); see also Beach, 523 U.S. at 413. In fact, a

consumer may exercise the right to rescind any extension of credit

carrying a security interest over his principal dwelling "until

midnight of the third business day" after the extension of credit,

after receiving notice of the right to rescind, or after receiving

8
We note that Sheedy's counsel appeared to concede at oral
argument that her TILA claim was time-barred "as a statutory
claim." Nevertheless, we examined it in an attempt to clarify
Sheedy's arguments and to avoid confusion regarding her statements
that the federal law claims are related to the state law claims,
that TILA relief that is time-barred can still be requested in
recoupment, and that the TILA claim "informs" her other state law
claims.

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all material disclosures. 12 C.F.R. § 226.15(a)(3). It is when

these disclosures are not delivered that "the right to rescind

shall expire 3 years after the occurrence giving rise to the right

of rescission, or upon transfer of all of the consumer's interest

in the property, or upon sale of the property, whichever occurs

first." Id. Thus, applying the longer three-year period based on

Sheedy's assertion that her husband never received any disclosures,

we agree with the courts below that any claim for rescission under

TILA for lack of disclosures or inaccuracies was brought more than

three years after the consummation of the 2004 Transaction and is

time-barred.

Conscious of this limitations period, Sheedy next argues

that she would still have a right to request rescission in

recoupment by raising it defensively under the Massachusetts

statute. Beach recognized that a debtor in a collections action

has a "right to plead recoupment, a defense arising out of some

feature of the transaction upon which the [creditor's] . . .

action is grounded, [which] survives the expiration of the period

provided by a statute of limitation that would otherwise bar the

recoupment claim as an independent cause of action." 523 U.S. at

415 (citations and internal quotation marks omitted). However, in

this case, because Congress clearly intended that any TILA action

brought outside of the three-year statute of limitations be time-

barred, there is no independent ground to raise the right as a

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defense in recoupment. See id. at 418 ("We respect Congress's

manifest intent by concluding that the [TILA] permits no federal

right to rescind, defensively or otherwise, after the 3-year period

of § 1635(f) has run.").

C. The Chapter 93A Claims

Chapter 93A protects consumers from "unfair methods of

competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce . . . ." Mass. Gen. Laws ch. 93A,

§ 2. In order to pursue a claim under this statute, an injured

consumer must, "[a]t least thirty days prior to the filing of any

such action, [mail or deliver] a written demand for relief . . . ."

Mass. Gen. Laws ch. 93A, § 9. Furthermore, actions arising under

Chapter 93A "shall be commenced only within four years next after

the cause of action accrues." Mass. Gen. Laws ch. 260, § 5A; see

also Latson v. Plaza Home Mortg., Inc., 708 F.3d 324, 326 (1st Cir.

2013) ("The limitations period for chapter 93A is four years from

injury." (citing Mass. Gen. Laws ch. 260, § 5A)).

Massachusetts has a discovery rule that triggers the

accrual of the cause of action for purposes of the statute of

limitations "when a plaintiff discovers, or any earlier date when

she should reasonably have discovered, that she has been harmed or

may have been harmed by the defendant's conduct." Epstein v. C.R.

Bard, Inc., 460 F.3d 183, 187 (1st Cir. 2006) (quoting Bowen v. Eli

Lilly & Co., 557 N.E.2d 739, 741 (Mass. 1990)).

-15-
 Sheedy argues that WAMU behaved in a way that was unfair

and deceptive by not delivering all required material disclosures

and by misrepresenting some of the terms disclosed. She claims

that "[t]he totality of the circumstances surrounding this

transaction fully warrant a conclusion that Sheedy was misled into

entering into a refinancing that was not in her best interests

. . . ." Yet, Sheedy tells us that she knew at the time of the

2004 Transaction that her husband did not receive the required

disclosures she now claims he should have received. Moreover, she

should have known immediately upon receiving the loan documents

that different amounts were listed by WAMU in the Truth in Lending

statement and the Note itself. See Latson, 708 F.3d at 327 ("Here

the interest terms and the implications of their burdens were

apparent when the [borrowers] signed and got their money, a

conclusion underscored by the Massachusetts rule that the terms of

written agreements are binding whether or not their signatories

actually read them.") (citing St. Fleur v. WPI Cable Sys./Mutron,

879 N.E.2d 27, 35 (Mass. 2008)). Therefore, any claim under

Chapter 93A is time-barred because Sheedy's four-year limitations

period began when she entered into the loan in 2004.9

9
Insofar as we conclude that Sheedy's Chapter 93A claim is time-
barred, we need not venture into whether her discussion of WAMU's
conduct in the Chapter 13 plan constituted sufficient written
demand for relief as required by Massachusetts General Laws Chapter
93A, § 9.

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D. Rescission in Recoupment

As part of the discussion of her alleged state law

claims, i.e., common law fraud and Chapter 93A, Sheedy also

advances in her brief the argument that her request for rescission

in recoupment is immune from any limitations period because the

equitable remedy of recoupment can be raised defensively at any

time. We first describe these remedies by noting that recoupment

is fundamentally different from rescission. See In re O'Connell,

No. 11–10940, 2012 WL 2685149, at *5 (Bankr. D. Mass. July 6, 2012)

("Recoupment and rescission are [like] apples and oranges."). On

the one hand, "[r]escission affects a return to the status quo."

Schwartz v. Rose, 634 N.E.2d 105, 109 (Mass. 1994). It "is the

'unmaking' or 'voidance' of a contract." May v. SunTrust Mort.,

Inc., 7 N.E.3d 1036, 1042 (Mass. 2014) (quoting Black's Law

Dictionary 1420-21 (9th. ed. 2009)). Thus, in order to obtain

rescission of a transaction, the party requesting such remedy "must

restore or offer to restore all that he received under it."

Bellefeuille v. Medeiros, 139 N.E.2d 413, 415 (Mass. 1957)

(citations omitted). On the other hand, recoupment "allows a

defendant to 'defend' against a claim by asserting -- up to the

amount of the claim -- the defendant's own claim against the

plaintiff growing out of the same transaction." Bolduc v. Beal

Bank, SSB, 167 F.3d 667, 672 (1st Cir. 1999) There is no time

limit to raise recoupment as a defense. See May, 7 N.E.3d at 1043

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("[T]he right to recoupment contains no time limitations on

assertion of the right. This accords with the common-law

understanding of recoupment as a defensive mechanism whereby a

defendant may, at any time, assert claims against the plaintiff in

reduction of the plaintiff's claims when those claims arise out of

the same transaction; it is an offsetting of liabilities within a

transaction." (alteration omitted) (citing Bose Corp. v. Consumers

Union of U.S., Inc., 326 N.E.2d 8 (Mass. 1975))); see also Bull v.

United States, 295 U.S. 247, 262 (1935) (explaining that recoupment

is allowed "in the nature of a defense arising out of some feature

of the transaction upon which the plaintiff's action is grounded

[and that it] is never barred by the statute of limitations so long

as the main action itself is timely").

In the instant case, this means that if Sheedy is granted

the requested relief of rescission in recoupment, she would be

allowed to avoid the Secured Creditor's foreclosure action by

reviving her own claim arising under the 2004 Transaction. That

would result in rescission being a "setoff" against foreclosure.

Yet, in recoupment, there is a difference between a defendant

obtaining damages caused by a plaintiff and the defendant obtaining

rescission of a mortgage-secured obligation owed to the plaintiff.

See Beach, 523 U.S. at 411 ("Since a statutory rescission right

could cloud a bank's title on foreclosure, Congress may well have

chosen to circumscribe that risk, while permitting recoupment of

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damages regardless of the date a collection action may be

brought."); see also May, 7 N.E.3d at 1042. Thus, the question

becomes whether rescission is available to Sheedy in recoupment.

Under Massachusetts common law, "recoupment and

rescission were consistently treated as separate, nonoverlapping

remedies [,] . . . as [these] are inconsistent remedies, a person

who has once elected to pursue one of them cannot afterwards seek

the other." May, 7 N.E.3d at 1042 (alterations omitted) (citations

and internal quotation marks omitted). Despite this apparent

preclusion of rescission in recoupment, Sheedy argues that the

Supreme Judicial Court's decision in May does not impede her from

obtaining such relief. In that case, debtors in a position

equivalent to Sheedy's filed an adversary proceeding against a

creditor, also within a Chapter 13 bankruptcy case, seeking

rescission of a home-refinancing loan transaction. The statute at

issue in May, however, was not Chapter 93A. Instead, it was the

Massachusetts Consumer Credit Cost Disclosure Act ("MCCCDA"), Mass.

Gen. Laws ch. 140D, §§ 1-35, the TILA-equivalent state statute that

"governs the rights and duties of creditors and obligors (borrowers

or consumers) engaged in consumer credit transactions . . .

[including] the refinancing of a consumer's home where the consumer

grants a mortgage to the creditor to secure the refinancing loan."

May, 7 N.E.3d at 1037. The Supreme Judicial Court concluded that

rescission is not a remedy in recoupment for violations of the

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MCCCDA, in part because under the "common-law[,] recoupment does

not include the use of rescission as a form of recoupment." Id. at

1043.

Sheedy's attempts to distinguish May from the present

case are fruitless. Pointing to no supporting source, Sheedy asks

us to conclude that, while Massachusetts law does not allow

rescission in recoupment in claims arising under the MCCCDA, the

legislative intent can easily be avoided by any defendant raising

an identical claim as a "Chapter 93A claim." That is, without

explanation, Chapter 93A permits a defendant to revive in

recoupment what the legislature expressly wanted foreclosed by the

statute of limitations under the statute intended to protect such

borrower. We are unpersuaded. Even the May court's statement of

the question before it directly addresses and forecloses the issue

in the instant case: whether any "laws of the Commonwealth

pertaining to recoupment provided for or recognize rescission as a

form of recoupment, at least where rescission is used defensively

to meet an obligation due." Id. at 1041. In answering this

question in the negative, the Supreme Judicial Court emphasized

that a borrower could seek rescission -- where allowed -- but not

in recoupment. Id. at 1043 ("[R]ecoupment and rescission are

separate, and common-law recoupment does not include the use of

rescission as a form of recoupment."). Furthermore, May recognizes

that it is possible for a future plaintiff to have a defensive

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claim for damages under Chapter 93A that could be raised in

recoupment, but not a claim for rescission. Id. at 1044 n.17

("Here, however, because the plaintiffs' claim alleging a violation

of G.L. c. 93A is tied to their asserted right to rescission, which

does not exist, their c. 93A claim currently does not appear to

offer relief.").

Sheedy only offers one argument to differentiate her case

from May, stating that since "Sheedy is proceeding under the

federal statute, [May] does not control since it applies only to

the [TILA-equivalent] state statute." This argument contradicts

another statement in Sheedy's brief that the reason we should

ignore the statute of limitations applicable to her TILA claim in

the first place is that a plaintiff may preserve "a right of

rescission under Chapter 93A of the Massachusetts General Laws."

Moreover, in her complaint, Sheedy's sole remedy request under

Chapter 93A was for rescission. Thus, we conclude that, inasmuch

as May does not allow rescission in recoupment under the MCCCDAA,

and rescission in recoupment is not allowed pursuant to

Massachusetts common law, Sheedy has not advanced anything to

support that -- based on the same facts -- a defendant may

circumscribe the statutes to revive such a claim through Chapter

93A. Consequently, Sheedy may not assert a claim for rescission in

recoupment under Chapter 93A.

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E. The Fraud, Deceit, and Misrepresentation Claim

Sheedy argues that the "forensic audit report" obtained

from MFI-Miami found that the terms of the Truth in Lending

statement contradict the terms of the loan because the payment due

on the sixty-first month turned out to be $4,055.05, instead of the

$4,331.58 that WAMU disclosed to her. Thus, because she was

notified when she entered into the loan that she would have to pay

a higher amount than what she ended up having to pay, she was

necessarily deceived. Another such example of claimed deceit and

misrepresentation is the fact that the Note stated that she would

have to pay $4,109.56 per month for the first sixty months, but she

was only required to pay $2,446.88 each of these months.

Accordingly, Sheedy stresses that WAMU induced her into entering a

loan with false and misleading information.

As a preliminary observation, while it may be a violation

of federal and state laws and regulations in some circumstances,

Sheedy does not explain how telling a borrower that she will be

responsible for a higher amount than what is actually demanded of

her fraudulently induces such a borrower into entering a loan that

she would not have otherwise executed.10 In any event, Sheedy's

argument is misleading because the amount actually paid by her

10
We do not rule out that some borrowers may be defrauded by
entering into contracts that demand higher payments than what are
actually required of them, e.g., when a borrower expects lower
overall interest expense based on higher payments up-front.

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during the initial sixty-month period was based on the addendum to

the Note and not on what the Note itself provided.

To successfully pursue a fraud claim under Massachusetts

law, Sheedy had to establish that "(1) [WAMU] made a false

representation with knowledge of its falsity for the purpose of

inducing plaintiffs to act thereon; (2) that [Sheedy] relied upon

the representation as true and acted upon it to [her] detriment;

and (3) that [her] reliance was reasonable under the

circumstances." FAMM Steel, Inc. v. Sovereign Bank, 571 F.3d 93,

105-106 (1st Cir. 2009) (citing Rodi v. S. New Eng. Sch. of Law,

532 F.3d 11, 15 (1st Cir. 2008)).

We take these elements in that order, beginning with the

knowledge element. Because Sheedy does not argue that WAMU had

knowledge of the falsity of the information, we assume that she

implies that it should have been apparent to WAMU that the Note and

the Truth in Lending statement contained different information, and

that one of the numbers was wrong. However, absent more detailed

evidence, it is not obvious that a payment amount provided in the

disclosure is deceptive when the interest rate is variable -- by

its own terms the payment amount will be the result of applying the

interest formula at a future time. See 12 C.F.R. § 226.18(f)

(listing the required disclosures for variable rate). Even

assuming that the variable payment amounts could be predicted and

that WAMU should have had knowledge that the amounts disclosed in

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the two documents were different, Sheedy still failed to establish

the remaining elements.

Sheedy's arguments also fail when it comes to the

reliance element. She first recognizes that the details disclosed

by WAMU were contradictory and that "any reasonable person would be

confused by this discrepancy[,]" yet she claims that she still

relied on the higher payment amounts represented by WAMU and acted

upon them to her detriment. Sheedy does not argue that this

resulted in any specific harm. Instead, she simply asks that we

find quite irrationally that she was harmed by the alleged fraud

based on the fact that she was later required to make lower

payments.

Finally, Sheedy does not establish how her reliance on

"confusing" and "contradictory" disclosures was reasonable under

the circumstances, especially in light of the facts that she had

been in the real estate industry and had a real estate broker

license since the early 1980s. See Yorke v. Taylor, 124 N.E.2d

912, 916 (Mass. 1955) (noting reliance cannot be deemed reasonable

when alleged misrepresentation is "palpably false").11

11
Because we conclude that Sheedy's allegations on appeal are
insufficient to establish her underlying fraud claim, we need not
examine the effects of the MFI-Miami report's exclusion or the
Secured Creditors arguments that any liability by WAMU was retained
by the FDIC.

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F. The Objection to the Secured Claim

Sheedy presents on appeal a short conclusory argument

that the Secured Creditors did not explain why their claim for

costs and attorney fees is "reasonable and necessary," and thus the

claim should be disallowed. Additionally, citing to In re Plant,

288 B.R. 635 (Bankr. D. Mass 2003), without any effort to develop

an argument, Sheedy states simply that the Secured Claim does not

comply with the court's rule for allowing attorney fees. Sheedy

does not state what those rules are.12 We think this is nothing

more than a skeletal presentation of the argument; it is thus

waived.13 See Matt v. HSBC Bank USA, N.A., 783 F.3d 368, 373 (1st

Cir. 2015) ("These issues are stated 'in the most skeletal way,

leaving the court to do counsel's work, create the ossature for the

argument, and put flesh on its bones.'" (quoting Zannino, 895 F.2d

at 17)).

G. Deutsche Bank's Standing as Sheedy's Creditor

In essence, Sheedy's standing challenge is that Deutsche

Bank cannot enforce the Mortgage against her because it was

12
In re Plant includes a detailed explanation of the applicability
of Federal Rule of Bankruptcy Procedure 2016 and Massachusetts
Local Bankruptcy Rule 2016-1. 288 B.R. at 663-64. Those rules in
turn list a number of requirements for applications for
compensation and fees against the estate. Sheedy does not explain
how these were not followed.
13
The district court found the Secured Creditors had presented an
affidavit with sufficient information for Sheedy to explain what
her objection was.

-25-
transferred into the Securitized Trust in violation of the PSA, six

years after the trust was created. However, it is Sheedy who lacks

standing to challenge Deutsche Bank's claim against her on this

ground. Sheedy cannot question Deutsche Bank's status as her

creditor unless she "challenge[s] a mortgage assignment as invalid,

ineffective, or void[,]" rather than as an assignment that is only

"voidable." Culhane v. Aurora Loan Services of Nebraska, 708 F.3d

282, 291 (1st Cir. 2013). Yet a valid challenge for violations of

the terms of a PSA would result in the assignment being voidable

and not void. Butler v. Deutsche Bank Tr. Co. Americas, 748 F.3d

28, 37 (1st Cir. 2014) ("Under Massachusetts law, it is clear that

claims alleging disregard of a trust's PSA are considered voidable,

not void.").

III. Conclusion

For the foregoing reasons, we affirm the grant of summary

judgment in favor of the Secured Creditors.

Affirmed.

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