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Real property - Mortgage - Settlement.

Byline: Mass. Lawyers Weekly Staff

Where a homeowner brought counterclaims against the bank who held his mortgage, alleging that the bank breached the terms of a class action settlement and failed to comply with notice requirements before foreclosure, his claims should be dismissed for lack of subject matter jurisdiction because they did not relate to the title or interest in land, but he should have leave to amend his claims should he wish to challenge the foreclosure sale.

"The loan that [Alfred Byron] Coffin obtained from [World Savings Bank, FSB] and that is secured by the Mortgage is a so-called 'Pick-a-Payment' mortgage.

"The problem for borrowers with the 'Pick-a-Payment' mortgage was that the real interest rate was not disclosed. The interest rate would adjust upward abruptly, starting as soon as three months after the origination of the mortgage.

"Starting in August of 2007, WSB and then Wachovia Mortgage, FSB (Wachovia) were sued in multiple class actions in multiple federal district courts and by ten different state attorneys general.

"In December 2010, the parties to the Class Action entered into a comprehensive class action settlement agreement.

"Coffin was reasonably identifiable as a potential settlement class member, but Wells Fargo did not notify or advise Coffin that the district court had entered the Preliminary Order or advise the Settlement Administrator that Coffin was one of the members of Class B.

"As a direct result, Coffin was deprived of the opportunity to modify the Mortgage between December 18, 2010 and June 30, 2013, and he continued to make 'Pick-a- Payment' mortgage payments at the inflated monthly rate of $3,911.92.

"Wells Fargo sent Coffin a Notice of Foreclosure sale on August 2, 2016, and conducted a foreclosure auction of the Property on September 1, 2016.

"From these factual allegations, the Counterclaim brings four counts. Count One is for breach of contract, alleging that Wells Fargo has breached the settlement agreement, causing Coffin damage. Count Two is labeled 'M.G.L. Ch. 244 Sec. 35A, B, & C.' Count Two alleges that Wells Fargo did not comply with the notice requirements of these sections, precluding it from foreclosing on the Mortgage. Count Three is for violation of G.L. c. 93, 49, and Count Four is for violation of G.L. c. 93A, 9.

"First, Wells Fargo argues that this court lacks jurisdiction over all the counts in the Counterclaim because these counts seek to enforce the Class Action settlement agreement, and jurisdiction over the interpretation and enforcement of that agreement was retained by the district court in the Class Action. Second, Wells Fargo argues, for the same reason the Counterclaim is barred by res judicata: Coffin's claims about the Mortgage were decided or released by the settlement agreement, and he is bound by the terms of that agreement. Third, the facts as pled in the Counterclaim cannot establish a violation of G.L. c. 244, 35B. Fourth, claims under G.L. c. 93, 49, and G.L. c. 93A, 9, do not involve 'any right, title or interest in land.' G.L. c. 185, 1(k).

"Unlike Counts One, Three, and Four, the settlement agreement does not deprive the court of subject matter jurisdiction over Count Two. Count Two is not a claim that Wells Fargo breached the settlement agreement, although its alleged failure to comply with the settlement agreement is part of the claim. Rather, Count Two seeks a determination of whether Wells Fargo complied with Massachusetts foreclosure law as set forth in G.L. c. 244. The settlement agreement does not reach so far as to deprive this court of jurisdiction to determine the scope of Massachusetts law.

"In the Motion to Amend, Coffin seeks leave to file an amended counterclaim (Amended Counterclaim) that alleges additional facts and adds two more counts, for a declaratory judgment and to quiet title under G.L. c. 240, 6-10. The additional factual allegations are that Wells Fargo did not comply with the notice requirements of the Mortgage; that Coffin did not receive the 35A Notice or the 35B Notice; that Coffin did not receive the notice of sale required by G.L. c. 244, 14; and that the foreclosure sale did not take place, in contradiction to the affidavit of sale registered by Wells Fargo pursuant to G.L. c. 244, 15(b). Wells Fargo opposes the Motion to Amend.

"Coffin alleges that the 35A Notice and the 35B Notice were never sent, and that this failure to strictly comply with G.L. c. 244, 35A and 35B, voids the foreclosure. All the issues relating to the 35B Notice are brought within the ambit of Count Two of the original Counterclaim, and cannot form the basis for a separate claim to void the foreclosure.

"In any event, whether pled in other claims or not, any claims based on Coffin's allegations that he did not receive the 35A and 35B Notices are not likely to withstand their first contact with the facts. Neither 35A nor 35B require that the notices be received. Rather, they expressly provide that notice is deemed made when the notice letter is sent by first class or certified mail to the borrower's last known address. G.L. c. 244, 35A(g), 35B(c).

"Next, Coffin alleges Coffin did not receive the notice of sale required by G.L. c. 244, 14.

"As set forth below, Coffin will be asked to file an amended counterclaim consistent with this memorandum and order. If that amended counterclaim asserts that Coffin did not receive the notice of sale or that it was not sent, then, as with the 35A and 35B Notices, Wells Fargo may show that it sent the notice of sale by submitting an affidavit verifying the certified mailing and attaching copies of the notice and the appropriate receipts and those assertions will be dismissed.

"Finally, Coffin alleges that contrary to the affidavit of sale registered on his certificate of title, no foreclosure sale of the Property took place. Notwithstanding the affidavit of sale, Coffin may challenge the foreclosure sale and allege, as he does, that it did not take place. Such an allegation states a claim that Wells Fargo did not comply with G.L. c. 244, 4, or properly exercise the power of sale, and, therefore, that the foreclosure is void. Coffin's allegation that the foreclosure sale was not held would survive a motion to dismiss, and may be part of an amended counterclaim.

"Given the court's analysis of the proposed Amended Counterclaim, the most efficient course is to deny the Motion to Amend without prejudice, and give Coffin leave to file an amended counterclaim consistent with this memorandum and order."

Wells Fargo Bank, N.A. v. Coffin (Lawyers Weekly No. 14-099-18) (13 pages) (Foster, J.) (Nantucket Land Court) (Docket No. MISC 18-000166) (Oct 29, 2018).

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Title Annotation:Wells Fargo Bank, N.A. v. Coffin, Nantucket Land Court, Massachusetts
Publication:Massachusetts Lawyers Weekly
Date:Nov 19, 2018
Words:1152
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