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15-P-1458 Appeals Court
WILLIAM T. BARRASSO, JR. vs. NEW CENTURY MORTGAGE CORPORATION
& others.1
No. 15-P-1458.
Suffolk. October 20, 2016. - February 8, 2017.
Present: Hanlon, Sullivan, & Blake, JJ.
Real Property, Mortgage, Record title. Mortgage, Foreclosure,
Real estate, Assignment. Assignment. Contract,
Assignment, Modification. Negotiable Instruments,
Assignment, Note. Practice, Civil, Summary judgment.
Estoppel.
Civil action commenced in the Land Court Department on
March 30, 2012.
The case was heard by Howard P. Speicher, J., on a motion
for summary judgment.
Glenn F. Russell, Jr., for the plaintiff.
Roger Soun for the defendants.
1
Bank of America, N.A., as successor by merger to LaSalle
Bank, N.A., as trustee for the C-BASS Mortgage Loan Asset-Backed
Certificates Series 2007-SP2; Deutsche Bank National Trust
Company, as trustee for New Century Home Equity Loan Trust
Series 2005-C, Asset Backed Pass-Through Certificates; Ocwen
Loan Servicing, LLC; and U.S. Bank, National Associates, as
successor trustee for the C-Bass Mortgage Loan Asset-Backed
Certificates, Series 2007-SP2.
2
SULLIVAN, J. The plaintiff, William T. Barrasso, Jr.,
brought this quiet title action, alleging that two mortgages on
his condominium unit constitute a cloud on his title. See G. L.
c. 240, § 6. He claimed that the encumbrances should be
stricken from the land records because the original mortgagee no
longer exists and the identity of any present mortgagee cannot
be ascertained. A judge of the Land Court awarded summary
judgment to the defendants, determining that U.S. Bank, National
Associates (U.S. Bank), holds the first mortgage as trustee for
the C-BASS Mortgage Loan Asset-Backed Certificates Series 2007-
SP2 and that Deutsche Bank National Trust Company (Deutsche
Bank) holds the second mortgage as trustee for the New Century
Home Equity Loan Trust Series 2005-C, Asset-Backed Pass-Through
Certificates.
We affirm those portions of the judgment entered in favor
of the defendants dismissing the claims asserted by Barrasso and
granting affirmative relief to U.S. Bank. We vacate the portion
of the judgment granting Deutsche Bank affirmative relief in the
form of a declaration as to the validity of its title.
Background. We set out the facts in the summary judgment
record viewed in the light most favorable to the plaintiff. See
Cuddyer v. Stop & Shop Supermkt. Co., 434 Mass. 521, 522 (2001).
On or about September 16, 2005, Barrasso purchased unit 315 of
3
the Walnut Place Condominium, located at 8 Walnut Street in
Peabody (property), for $264,000. To finance the purchase,
Barrasso obtained two loans from New Century Mortgage
Corporation (New Century), memorialized with two promissory
notes and secured by two mortgages on the property. The larger
of the two notes is in the amount of $211,200 (first note), and
the smaller is in the amount of $52,800 (second note) --
together, they comprised the entire purchase price.
The original of the first note is now physically in the
possession of U.S. Bank. Although the location of the original
second note cannot be ascertained from the record, there appears
to be no controversy between the parties about whether it is in
Deutsche Bank's control.
In connection with the notes, Barrasso granted a first
mortgage to New Century, and a second mortgage to New Century,
both of which are dated September 16, 2005, and both of which
were recorded in the registry of deeds. Before the execution of
the second mortgage, on or about March 2, 2005, New Century
granted Ocwen Loan Servicing, LLC (Ocwen), a limited power of
attorney, with Ocwen's enumerated powers including the authority
to "execute, acknowledge, seal and deliver . . . assignments of
deed of trust/mortgage and other recorded documents."
1. New Century bankruptcy and the postbankruptcy transfer
of the first mortgage. New Century filed a voluntary petition
4
for bankruptcy in the United States Bankruptcy Court for the
District of Delaware (Bankruptcy Court) on or about April 2,
2007. U.S. Bank contends (and Barrasso disputes) that,
notwithstanding New Century's bankruptcy, the first mortgage was
transferred to the C-BASS Mortgage Loan Asset-Backed
Certificates Series 2007-SP2 (C-BASS Trust) shortly thereafter,
on or before June 29, 2007, via a pooling and servicing
agreement dated June 1, 2007 (2007 PSA). The 2007 PSA listed C-
BASS ABS, LLC, as "Depositor"; Credit-Based Asset Servicing and
Securitization LLC as "Seller"; Litton Loan Servicing LP
(Litton) as "Servicer"; and LaSalle Bank National Association
(LaSalle) as "Trustee." A mortgage loan schedule associated
with the 2007 PSA specifically identified the first mortgage by
loan number as included in the assets transferred to the C-BASS
Trust. Additionally, a limited power of attorney dated June 22,
2007, granted Litton the power to "execute, acknowledge, seal
and deliver" mortgage assignments on behalf of New Century.
However, New Century was not listed as a party to the 2007 PSA,
and no assignment of the first mortgage by New Century to any
other entity was immediately recorded in connection with the
2007 PSA.
On January 17, 2008, Barrasso signed a loan modification
agreement (modification agreement) effective December 1, 2007.
The modification agreement was between Barrasso and LaSalle, as
5
trustee for the C-BASS Trust, and specifically referred to the
first mortgage and to the street address of the property.
Several months later, during the fall of 2008, LaSalle merged
into Bank of America, National Association (Bank of America).
Bank of America became trustee of the C-BASS Trust and successor
to LaSalle in connection with the modification agreement.
In an assignment dated April 14, 2009, Litton, in its
capacity as attorney-in-fact for New Century, assigned the first
mortgage to Bank of America, as successor by merger to LaSalle
and as trustee for the C-BASS Trust. That assignment was
recorded in the registry of deeds on or about April 8, 2010.
Barrasso commenced this action by filing a quiet title
complaint in the Land Court on March 30, 2012. At some point,
U.S. Bank replaced Bank of America as trustee for the C-BASS
Trust. In an assignment dated June 5, 2013, Ocwen, as Litton's
successor and as attorney-in-fact for Bank of America, purported
to assign the first mortgage to U.S. Bank as trustee for the C-
BASS Trust.2 The April 14, 2009, assignment by Litton to Bank of
America, and the June 5, 2013, assignment by Ocwen to U.S. Bank
are the only assignments of the first mortgage appearing in the
recorded title chain.
2
A limited power of attorney executed by Bank of America on
or about January 13, 2009, granted Litton the power to modify
and assign mortgages.
6
2. Prebankruptcy transfer of the second mortgage.
Deutsche Bank contends (and Barrasso disputes) that on or before
December 6, 2005, the second mortgage was transferred into the
New Century Home Equity Loan Trust Series 2005-C, Asset-Backed
Pass-Through Certificates (Home Equity Trust). A pooling and
servicing agreement related to that trust, dated November 1,
2005 (2005 PSA), listed New Century Mortgage Securities, Inc.,
as "Depositor," JPMorgan Chase Bank, National Association, as
"Servicer," and Deutsche Bank National Trust Company as
"Trustee." A mortgage loan schedule associated with the 2005
PSA specifically identified the second mortgage as among those
transferred to the Home Equity Trust. New Century, however, was
not named as a party to the 2005 PSA. Additionally, no
assignment of the second mortgage by New Century to any other
entity was immediately recorded in connection with the 2005 PSA.
While this case was pending, Ocwen, as attorney-in-fact for
New Century, purported to assign the second mortgage to Deutsche
Bank as trustee for the Home Equity Trust in an assignment dated
August 10, 2012.3 The assignment of the second mortgage from
Ocwen to Deutsche Bank is the only assignment of the second
mortgage appearing in the recorded title chain.
3
By that time, Ocwen had become the loan servicer for
Deutsche Bank, which is trustee of the Home Equity Trust.
7
3. Land Court litigation. In the Land Court, Barrasso
claimed that New Century could not have effectively transferred
either of the mortgages after the date of New Century's
bankruptcy filing -- and certainly could not have done so after
the Bankruptcy Court approved a liquidation plan on July 15,
2008. Accordingly, Barrasso claimed that the recorded
assignments of both the first and second mortgage were void. As
to the theory that valid, off-record assignments existed and
were confirmed in one or more of the recorded documents,
Barrasso claimed that neither the 2005 PSA nor the 2007 PSA
operated as a valid assignment because New Century, the original
mortgagee, was not a party to either document. The defendants
argued that the recorded assignments were valid because the
bankruptcy did not strip New Century of the power to assign one
or both mortgages, and they were confirmatory of off-record
assignments.
A judge of the Land Court concluded that the bankruptcy was
not a bar to the transfer, that the undisputed facts showed a
transfer of the mortgages to the defendant trusts, and,
alternatively, that the modification agreement estopped Barrasso
from disputing the state of the title as to the first mortgage
as of the date of the modification agreement. Citing Eaton v.
Federal Natl. Mort. Assn., 462 Mass. 569, 577-578 (2012), the
judge also reasoned that "even if there were any doubt as to who
8
holds the [first] mortgage, the note-holder could simply compel
a transfer of the mortgage." Judgment entered dismissing
Barrasso's claims and affirmatively declaring that U.S. Bank
held the first mortgage and Deutsche Bank held the second
mortgage.
Discussion. "We review a decision to grant summary
judgment de novo." Boazova v. Safety Ins. Co., 462 Mass. 346,
350 (2012). We review the record to determine whether, in the
light most favorable to the nonmoving party, there is no genuine
issue of material fact and the moving party is entitled to
judgment as a matter of law. Commissioners of the Bristol
County Mosquito Control Dist. v. State Reclamation & Mosquito
Control Bd., 466 Mass. 523, 528 (2013). The moving party
assumes the burden of affirmatively demonstrating that no
genuine issue of fact exists on any relevant issue, even if the
movant would not bear the burden of proof on that issue at
trial. See Attorney Gen. v. Bailey, 386 Mass. 367, 371, cert.
denied, 459 U.S. 970 (1982).
However, if the nonmoving party, here Barrasso, fails to
establish an essential element of the claim asserted, any
remaining disputed facts are immaterial. See Sarkisian v.
Concept Restaurants, Inc., 471 Mass. 679, 681 (2015). Barrasso
seeks to have the titles held by U.S. Bank and Deutsche Bank
declared invalid before either bank can foreclose. Only a
9
wholly void assignment in the chain of title will invalidate a
foreclosure, however. A deficiency in an assignment "that makes
it merely voidable at the election of one party or another" does
not invalidate the title of the assignee, or that of the
postforeclosure owner. Sullivan v. Kondaur Capital Corp., 85
Mass. App. Ct. 202, 206 n.7 (2014). Bank of N.Y. Mellon Corp.
v. Wain, 85 Mass. App. Ct. 498, 502-503 (2014). Accordingly, as
a threshold matter, Barrasso may prevail at summary judgment
only upon a showing that there is a genuine dispute of material
fact as to whether the recorded assignments of the first and
second mortgages (to U.S. Bank and Deutsche Bank, respectively)
are entirely void -- not merely voidable. See id. at 502
("[W]here the foreclosing entity has established that it validly
holds the mortgage, a mortgagor in default has no legally
cognizable stake in whether there otherwise might be latent
defects in the assignment process").
We consider the assignment of the first mortgage and the
assignment of the second mortgage in turn.
1. The first mortgage. As discussed above, Barrasso
contends that the first mortgage was never effectively
transferred to the C-BASS Trust because (i) New Century's status
as a bankruptcy petitioner as of April 2, 2007, rendered it
incapable of transferring its interest in the first mortgage
after that date without court approval, and (ii) New Century,
10
the original mortgagee, is not a party to the 2007 PSA and no
other document shows a transfer of the first mortgage from New
Century to any of the parties to the 2007 PSA. We need not,
however, determine whether a genuine dispute of material fact
exists as to either of these issues because we agree with the
motion judge that the modification agreement operated to estop
Barrasso from claiming any entity other than LaSalle (as trustee
of the C-BASS Trust) held the first mortgage on or after
December 1, 2007. In voluntarily entering the modification
agreement, Barrasso was estopped from later claiming that
LaSalle was not the holder of the first mortgage.
The modification agreement signed by Barrasso plainly
referred to the first mortgage by its recording references, and
defined that document as the "Security Instrument." It stated
that "[t]he Security Instrument . . . encumbers the property,"
and correctly referred to Barrasso's home by street address and
by incorporating a full legal description attached as its
exhibit A. The modification agreement defined the
"Lender/Grantee" as LaSalle in its capacity as trustee for the
C-BASS trust, and bore the signature of a vice-president of
LaSalle. The modification agreement provided a fixed rate of
interest on Barrasso's loan for twenty-two months. The text of
the modification agreement included a number of representations
as to which "Borrower," defined as Barrasso, "understands and
11
agrees," namely that the mortgage remained valid and he waived
all forms of challenge to it.4
Barrasso now seeks to avoid the representations in the
modification agreement, after having voluntarily entered that
agreement and accepted its benefits, resulting in corresponding
detriment to LaSalle as trustee of the C-BASS Trust. "The law
recognizes no such right."5 Coz Chem. Corp. v. Riley, 9 Mass.
App. Ct. 564, 568 (1980). Estoppel is established where a party
has shown "(1) a representation intended to induce reliance on
the part of a person to whom the representation is made; (2) an
act or omission by that person in reasonable reliance on the
representation; and (3) detriment as a consequence of the act or
omission." Reading Co-op. Bank v. Suffolk Constr. Co., 464
Mass. 543, 556 (2013), quoting from Bongaards v. Millen, 440
4
Those representations included (i) "[a]ll the rights and
remedies, stipulations, and conditions contained in the Security
Instrument relating to default in the making of payments under
the Security Instrument shall also apply to default in the
making of the modified payments hereunder"; (ii) "[a]ll
covenants, agreements, stipulations, and conditions in the Note
and Security Instrument shall be and remain in full force and
effect, except as herein modified . . ."; and (iii) "Borrower
has no right of set-off or counterclaim, or any defense to the
obligations of the Note or Security Instrument." Barrasso's
signature on the modification agreement is notarized and dated
January 17, 2008.
5
Notably, a showing of intentional fraud by the allegedly
estopped party is not required to sustain an estoppel defense.
"[T]he test appears to be whether in all the circumstances of
the case conscience and duty of honest dealing should deny one
the right to repudiate the consequences of his representations
or conduct. . . ." McLearn v. Hill, 276 Mass. 519, 525 (1931).
12
Mass. 10, 15 (2003). Having accepted and benefited from a
modification of the first mortgage offered by LaSalle in 2007,
Barrasso cannot now escape enforcement of the first mortgage by
questioning LaSalle's ownership of it as of the effective date
of the modification.
Because the modification agreement is dispositive of the
true identity of the first mortgage holder as of December 1,
2007, in relation to the parties named in this case, it follows
that the written and recorded assignment dated April 14, 2009,
was confirmatory of a transfer that had previously occurred.
Likewise, once title is determined to have been squarely within
the hands of Bank of America as of the April 14, 2009,
assignment, there is no basis for any challenge to Bank of
America's further transfer to U.S. Bank via another assignment.
Accordingly, on the undisputed facts in the summary judgment
record, Barrasso was not entitled to a removal of the first
mortgage as a cloud or encumbrance on his title as a matter of
law.
2. The second mortgage. Barrasso asserts that Deutsche
Bank did not provide sufficient evidence to conclude that it
holds title to the second mortgage consistent with the
instruction set forth by the Supreme Judicial Court in U.S.
Bank, Natl. Assn. v. Ibanez, 458 Mass. 637, 650 (2011). We
agree that a genuine issue of material fact exists on this
13
record regarding Deutsche Bank's title to the second mortgage,
because the record does not show that the "Depositor" named in
the 2005 PSA (or any other party to that agreement) ever
received an assignment of the second mortgage from New Century.
See ibid.
This court may, however, consider any grounds supporting
the motion judge's decision. See American Intl. Ins. Co. v.
Robert Seuffer GmbH & Co. KG, 468 Mass. 109, 113, cert. denied,
135 S. Ct. 871 (2014); John Duffy, D.C. v. Amica Mut. Ins. Co.,
89 Mass. App. Ct. 297, 298-299 (2016). The judge did not err in
allowing summary judgment for Deutsche Bank as to the second
mortgage because Barrasso has failed to demonstrate as a matter
of law that the second mortgage itself -- rather than merely a
recorded assignment of that mortgage -- is wholly void and
should be stricken from the record.
In his third amended complaint, Barrasso sought a
determination that both mortgages "be quieted and removed from
Plaintiff's title." In order to have the second mortgage
removed entirely from his title, Barrasso would have to
demonstrate not just that Deutsche Bank is not entitled to
enforce it, but that no one else is, either. See Oum v. Wells
Fargo, N.A., 842 F. Supp. 2d 407, 415 (D. Mass. 2012), abrogated
on other grounds by Culhane v. Aurora Loan Servs. of Neb., 708
F.3d 282 (1st Cir. 2013) ("Construing the assignments as invalid
14
. . . would have an impact only on the relationship between the
parties to the assignment contract").
Whether the mortgage granted to New Century by Barrasso
should now be deemed void -- by virtue of New Century's
bankruptcy or otherwise -- is a question entirely separate from
whether Deutsche Bank, in particular, is the current mortgagee.6
In fact, some party will be able to enforce the second mortgage
on behalf of the holder of the second note. See Eaton v.
Federal Natl. Mort. Assn., 462 Mass. at 576-577. As the judge
correctly stated, whoever holds the second mortgage holds it in
trust for the benefit of whoever is entitled to enforce the
corresponding note. The noteholder is entitled to demand an
assignment of that instrument for purposes of foreclosure.
6
Longstanding Massachusetts jurisprudence holds that "[a]
bill will lie to remove a cloud on title only if legal title and
actual possession are united in plaintiff." McCartin Leisure
Indus., Inc. v. Baker, 376 Mass. 62, 66 (1978), quoting from
MacNeil Bros. Co. v. State Realty Co. of Boston, 333 Mass. 770
(1956). Additionally, Massachusetts adheres to the "title
theory" of mortgage law, which means that when real property is
encumbered by a mortgage, legal title remains with the mortgagee
until the mortgage is foreclosed or the debt is paid, while the
mortgagor holds only equitable title. See Faneuil Investors
Group, Ltd. Partnership v. Selectmen of Dennis, 458 Mass. 1, 6
(2010); Bevilacqua v. Rodriguez, 460 Mass. 762, 774 (2011);
Abate v. Fremont Inv. & Loan, 470 Mass. 821, 832 (2015).
Applying these two concepts, the Federal District Court in Oum
concluded that a mortgagor cannot bring a quiet title action
against a mortgagee in Massachusetts where the mortgagor does
not allege that his or her underlying debt has been paid. 842
F. Supp. 2d at 412 & n.10. In light of the dicta in Abate v.
Fremont Inv. & Loan, supra at 835, that a quiet title action is
available to a mortgagor bringing a preforeclosure challenge to
purported mortgagee's title, we decline to reach the issue.
15
Ibid. The fact that the second note exists and that it is held
by or within the control of Deutsche Bank are undisputed facts.
Accordingly, any genuine factual dispute about that validity of
the assignment of the second mortgage to Deutsche Bank is
immaterial to the question of whether the original second
mortgage constitutes a cloud on Barrasso's title.
Conclusion. Those portions of the judgment dismissing with
prejudice all claims asserted by Barrasso, and granting relief
to U.S. Bank in the form of declarations regarding its mortgage
interests in the property, are affirmed. The portion of the
judgment awarding affirmative relief to Deutsche Bank declaring
its mortgage interest in the property is vacated, because there
7
are material facts in dispute concerning its title.
So ordered.
7
At the time of entry of judgment U.S. Bank's counterclaims
for money damages were voluntarily withdrawn. The judge treated
the parties' arguments under the quiet title statute as requests
for reciprocal declaratory relief. On appeal, Barrasso makes no
claim of error regarding this aspect of the relief granted.