In Defense of the Nims' threatened foreclosure auction, the Firm advanced argument that the Nims Mortgage was Obsolete by operation of law under G.L. c. 260, Section 33. The specific basis for the Mortgage being Obsolete was the fact that the Nims' Note had been accelerated more than five (5) years ago. in Deutsche Bank v. Fitchburg Capital, LLC, 471 Mass. 248 (SJC 2015), the Massachusetts Supreme Judicial Court conducted statutory construction to determine legislative intent, and unequivocally stated that the term "maturity date" as used within G.L. c. 260, Section 33.shall mean, "the date when the debt falls due".
December 02, 2019 Update - We Are Prepared for tomorrows oral argument. We would direct readers to pay special note as to the members of the panel. The audio of the oral argument should be available on the Appeals Court website. If this in fact the case, we will post it here so that it can be easily found and reviewed. Grace C. Ross submitted an Amicus Brief today, and we thank her for her efforts. Her Brief can be found below
October 30, 2019 Update - Oral Argument Scheduled For December 03, 2019 at the John Adams Courthouse
- Tuesday, December 3rd 2019, 9:30 AM
- Presiding: Wolohojian, Agnes, Neyman, JJ.
- John Adams Courthouse, Courtroom 3, Third Floor, Pemberton Square, Boston, MA 02108
November 03, 2019 Update - We have also added text and discussion below that was not included in the original blog post
The few cases advanced by borrowers seeking the use of this statute in defense of foreclosure have focused solely on the wording of the statute
Section 33. A power of sale in any mortgage of real estate shall not be exercised and an entry shall not be made nor possession taken nor proceeding begun for foreclosure of any such mortgage after the expiration of, in the case of a mortgage in which no term of the mortgage is stated, 35 years from the recording of the mortgage or, in the case of a mortgage in which the term or maturity date of the mortgage is stated, 5 years from the expiration of the term or from the maturity date, unless an extension of the mortgage, or an acknowledgment or affidavit that the mortgage is not satisfied, is recorded before the expiration of such period. In case an extension of the mortgage or the acknowledgment or affidavit is so recorded, the period shall continue until 5 years shall have elapsed during which there is not recorded any further extension of the mortgage or acknowledgment or affidavit that the mortgage is not satisfied. The period shall not be extended by reason of non-residence or disability of any person interested in the mortgage or the real estate, or by any partial payment, agreement, extension, acknowledgment, affidavit or other action not meeting the requirements of this section and sections 34 and 35. Upon the expiration of the period provided herein, the mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption or any other persons having an interest in the mortgaged property and, in the case of registered land, upon the payment of the fee for the recording of a discharge, the mortgage shall be marked as discharged on the relevant memorandum of encumbrances in the same manner as for any other mortgage duly discharged.
Indeed, the seminal case for this proposition continues to be the citation to; Hayden v. HSBC Bank USA, 867 F.3d 222, 224 (1st Cir. 2017), withdrawn, Hayden v. HSBC Bank USA, No. 16-2274, 2018 WL 3017468 (1st Cir. June 14, 2018).In Hayden the Panel of the First Circuit Judges merely stated the following under a FRCP, R. 12(b)(6) dismissal:
"The district court also properly dismissed the Haydens' obsolete mortgage claim, which has no basis in the plain text of the statute or in precedent. Under Massachusetts's obsolete mortgage statute, Mass. Gen. Laws ch. 260, § 33, a mortgage becomes obsolete and is automatically discharged five years after the expiration of the stated term or maturity date of the mortgage. Nothing in the text of the statute supports the Haydens' assertion that the acceleration of the maturity date of a note affects the five-year limitations period for the related mortgage. Their citation to the SJC's decision in Deutsche Bank National Trust Co. v. Fitchburg Capital, LLC, 28 N.E.3d 416 (Mass. 2015), is inapposite because the decision makes no mention of the impact of an accelerated note on the obsolete mortgage statute's limitations period."
The SJC in Deutsche Bank National Trust Co. v. Fitchburg Capital, LLC, 28 N.E.3d 416 (Mass. 2015) made examination of the Obsolete Mortgage Statute, however, the SJC was not presented with the precise issue of "Acceleration" regarding the "maturity date" of the underlying indebtedness to a Mortgage. However, the SJC was definitive that the "maturity date" of the Note is the determinative date for the Statute of Repose under G.L. c. 260, Section 33 to begin running; see Fitchberg at p. 254
"maturity date" means "[t]he date when a debt falls due, such as a debt on a promissory note or bond," and "mortgage" means "[a] conveyance of title to property that is given as security for the payment of a debt or performance of a duty and that will become void upon payment or performance according to the stipulated terms." Thus, the common meaning of the "maturity date of the mortgage" is the date on which the underlying debt is due because a mortgage derives its vitality from the debt that it secures This definition comports with the treatment of mortgages under our common-law principles. Although a mortgage and a note are separate entities in Massachusetts that can be split, it has long been recognized that "a mortgage ultimately depends on the underlying debt for its enforceability." Eaton v. Federal Nat'l Mtge. Ass'n, 462 Mass. 569, 576, 578 n.11 (2012), citing Crowley v. Adams, 226 Mass. 582, 585 (1917), Wolcott v. Winchester, 15 Gray 461 (1860), and Howe v. Wilder, 11 Gray 267, 269-270 (1858).By its nature, a mortgage does not mature distinctly from the debts or obligations that it secures. See Eaton, supra at 577-578 ("the basic nature of a mortgage [is] security for an underlying mortgage note"); Barnes v. Lee Sav. Bank, 340 Mass. 87, 90 (1959) ("The debt having been extinguished, a bond or mortgage given as security for the debt is necessarily discharged"). Accordingly, a mortgage is a device for providing security for a loan, but it does not generally have a binding effect that survives its underlying obligation. [Note 10] See Piea Realty Co. v. Papuzynski, 342 Mass. 240, 246 (1961), quoting Pineo v. White, 320 Mass. 487, 489 (1946) (unless other equitable considerations apply, "payment of the mortgage note . . . terminates the interests of the mortgagee without any formal . . . discharge and revests the legal title in the mortgagor"). Therefore, the judge's interpretation of the statute corresponds to the plain meaning of the language chosen by the Legislature.
Additionally, cases seeking to apply G.L. c. 260, Section 33 to a fact pattern including "acceleration", all mistakenly cite to G.L. c. 106, Section 3-118(a):
Section 3-118. (a) Except as provided in subsection (e), an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.
In Fitchberg, the SJC was clear that the Note does not have to be "extinguished" in order for G.L. c. 260, Section 33 to apply:
"The obsolete mortgage statute created a limitations period for bringing foreclosure actions against mortgages. G. L. c. 260, § 33. Under the amendment, the statute requires the holder of a mortgage to foreclose on the mortgage, record a document asserting nonsatisfaction, or record an extension before the mortgage has been on record for thirty-five years or before the secured debt is overdue by five years (and the due date is stated on the face of the mortgage). See St. 2006, c. 63, § 6.The statute has never been interpreted to require satisfaction of a mortgage's underlying obligations before the mortgage becomes unenforceable." Fitchberg at 257
The SJC found that G.L. c. 260, Section 33 speaks of the mortgage becoming obsolete five (5) years after the Note becomes "overdue", not extinguished, see Fitchberg at 257:
"The obsolete mortgage statute created a limitations period for bringing foreclosure actions against mortgages. G. L. c. 260, § 33. Under the amendment, the statute requires the holder of a mortgage to foreclose on the mortgage, record a document asserting nonsatisfaction, or record an extension before the mortgage has been on record for thirty-five yearsor before the secured debt is overdue by five years (and the due date is stated on the face of the mortgage). See St. 2006, c. 63, § 6."
Thus, Nims is distinguishable from cases such as Wells Fargo Bank, NA. v. Khurseed, NO. 18-ADSP-91 NO, 2019 WL 1989189 (Mass. App. Div.- April 29, 2019);
“The Borrower urges that a mortgage is extinguished and discharged when the statute of limitations for enforcement of the underlying note expires. In this case, the foreclosure was conducted on September 1, 2017, more than six years after the acceleration of the note on March 18, 2011. However, a mortgage continues to be enforceable as a proceeding in rem against the security, and not the person based upon the note. Citing Duplessis v. Wells Fargo Bank, N.A. No. 16-P-1040 (1:28 Opinion-Mass App. Div. May 30 2017).”
What the Khurseed Court failed to examine was the fact that the mortgage may "continue to be enforceable as an "in rem" proceeding", however that in rem proceeding is subject to the statue of repose under G.L. c. 260, Section 33 to enforce that mortgage within five (5) years of the "maturity date" of the Note. As explained above the acceleration of the Note indisputably advances the "maturity date of the note to become immediately due upon the Lender's election to "accelerate", see Ferreira v. Yared, 32 Mass. App. Ct. 328, 330 (1992):
"...the act of acceleration advances the maturity of the debt; the debt becomes immediately due and payable. Matter of LHD Realty Corp., 726 F.2d 327, 330 (7th Cir. 1984). Tan v. California Fed. Sav. & Loan Assn., 140 Cal.App. 3d 800, 809 (1983). Slevin Container Corp. v. Provident Fed. Sav. & Loan Assn., 98 Ill. App. 3d 646, 648 (1981). Kilpatrick v. Germania Life Ins. Co., 183 N.Y. 163, 168 (1905). George H. Nutman, Inc. v. Aetna Bus. Credit, Inc., 115 Misc. 2d 168, 169 (N.Y. Sup. Ct. 1982). Compare Pacific Trust Co. v. Fidelity Fed. Sav. "
Nims made no such claim of reliance upon the Note being unenforceable as did Khurseed. So, here we have evidence that borrowers challenging foreclosure really do not all rely upon identical claims for the entitlement to their relief. The preceding provides further evidence that findings solely relying upon citation to other 12(b)(6) Motion rulings as "precedent" is woefully misplaced.
When undertaking statutory construction, [which was Never undertaken by the First Circuit in Hayden], the state case law decisions have stated as follows:
“..the legislature's words are generally deemed to carry their plain and ordinary meaning. Boivin v. Black, 225 F.3d 36, 40 (1st Cir.2000); Cohen v. Comm'r of Div. of Med. Assist., 423 Mass. 399, 668 N.E.2d 769, 774 (1996). When that meaning produces a plausible result, the inquiry typically ends. Plumley v. S. Container, Inc., 303 F.3d 364, 369 (1st Cir.2002); Cohen, 668 N.E.2d at 774. Even so, plain meaning is not invariably the be all and end all of statutory construction. If a plain-meaning interpretation produces outcomes “that are either absurd or antithetical to [the legislature's] discernible intent,” an inquiring court must continue its search. Stornawaye Fin. Corp. v. Hill (In re Hill ), 562 F.3d 29, 32 (1st Cir.2009); accord Sullivan, 758 N.E.2d at 115.” In re Llc, 642 F.3d 263, 54 Bankr.Ct.Dec. 221, 265 (1st Cir., 2011)
Indeed, the Massachusetts Appeals Court has also discussed the effect of the “broad sweep” of a repose period under Legislative enacted statutory language:
“A statute of repose is a product of the Legislature. Its scope sweeps broader than any interests of judicial economy and it is not within our power to rewrite such legislation. Cf. Fidler v. E.M. Parker Co., 394 Mass. 534, 548 (1985) (statute of repose governing medical malpractice actions). The Legislature is not obliged to create statutory classifications “with surgical precision,” Opinion of the Justices, 408 Mass. 1215, 1224 (1990), for “[i]t is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.” Zeller v. Cantu, 395 Mass. 76, 84 (1985), quoting from Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 487–489 (1955). See Prudential Ins. Co. of America v. Boston, 369 Mass. 542, 547 (1976) (“function of the court” is to construe statute as it is written “and an event or contingency for which no provision is made does not justify” court to rewrite statute's terms or conditions to meet such event or contingency, as may arise).” Ry-Co Int'l, Ltd. v. Voniderstein, 89 Mass.App.Ct. 1130, 54 N.E.3d 606(Table) (1:28 Mass. App., 2016)
Thus, given the SJC interpretive guidance regarding the Legislative intent regarding the legislative usage, definition and meaning of the term “maturity date” as written by the Legislature under revised G.L. c. 260, §33, and the repose period set by the Legislature, a mere “plain meaning” interpretation of “maturity date” [as undertaken by the Superior Court Judge, produces a result that is antithetical to the intent of the Legislature, as G.L. c. 260, §33 was interpreted by the SJC in Fitchberg. Again such literal “plain-meaning” reading of G.L. c. 260, §33 creates an inherent conflict with the Legislative intent of said statute.
Thus, unlike the cursory review of the Obsolete Mortgage Statute made by the First Circuit [currently vacated] ruling in Hayden v. HSBC Bank USA, 867 F.3d 222, 224 (1st Cir. 2017), the fact that the "plain text of the statute" makes no mention of the note whatsoever (see above) did not terminate that court's duty to continue its examination.. Indeed, despite the fact that "the plain text of the statute" made no mention of the note, the SJC (as final arbiter of state law) conducted statutory construction to glean the legislative intent as to the meaning of "maturity date" Had the SJC stopped at the "the plain text of the statute" it never could have enunciated the opinion in Fitchburg as written.
Clearly the original "maturity date" of the Note was 2035. However, paragraph 22 of the Hayden Mortgage clearly anticipated default, and the "Acceleration Remedy". Thus, where HSBC Bank USA demanded the entire balance due and payable at the time of "Acceleration", the original "maturity date in 2035 became irrelevant. Indeed, no further billing statements or notices were sent to Hayden subsequent to the "Acceleration Notice". There was no question that the Hayden's Note had been Accelerated over five (5) years previous. It is undisputed that the foreclosing entity never filed any extension as allowed under statute. Thus, at the time the Hayden Note was Accelerated, the date that the debt became due was "Accelerated" from 2035 to the time of the "Accleration". Indeed, the Notice sent to the Hayden's clearly indicated that if they did not remit the entire amount outstanding within thirty (30) days of being Noticed, that the mortgage loan would be "Accelerated". The Fourth Circuit has examined a similar fact pattern regarding the "Acceleration" of a Note and the enforcement of a Mortgage, see Delebreau v. Bayview Loan Servicing, 770 F.Supp.2d 813 (4th Cir. May 2012) :
"In the present case, this date was June 5, 2007, the date set by Bayview in exercising its right of acceleration under the terms of the deed of trust. As stated above, the deed of trust provided that, upon acceleration, “all sums secured by this Security Instrument and accrued interest thereon shall at once become due and payable.” (Emphases added.) Because no additional payments were scheduled thereafter, the acceleration date became “the due date of the last scheduled payment of the agreement,” within the intendment of the statute of limitations. Therefore, the original schedule of payments, which would have ended on June 1, 2030, no longer had any effect under the terms of the deed of trust.2 The contrary position suggested by the Delebreaus, that the statute of limitations would begin to run only upon the loan maturity date, fails because it impermissibly ignores the terms of the deed of trust providing for loan acceleration. As the district court recognized, the limitations period under the Consumer Credit Act runs from “the due date of the last scheduled payment of the agreement,” which encompasses not only the original payment schedule but the parties' entire agreement, including the acceleration clause." Delebreau
Nims failed to satisfy the entire outstanding balance after receiving the acceleration Notice. Their case was dismissed solely through citation to [the currently vacated] First Circuit decision in Hayden, which as discussed remains currently pending before a new panel, and additionally never undertook any statutory construction of G.L. c. 260, Section 33.
Hayden [and its progeny] continue to be cited to as "precedent" in the Commonwealth, even though it currently remains vacated, and the subsequent cases all examining this issue (including the Nims Court) all relied upon the First Circuit ruling in Hayden, as well as the Hayden District Court ruling by the Massachusetts Federal Court opining on an undecided issue of Massachusetts State Law.
We successfully argued that the Hayden matter be vacated, please see our blog post on this from last year
We merely present the documents from Hayden and Nims below:
We wrote a blog post on this case last year,
As of the date of the drafting of this Draft post, Hayden remains pending before a new Panel at the First Circuit.
The relevant documents from Nims v. The Bank of New York Mellonare listed below. This matter is currently scheduled for oral argument some time in December 2019.
As this is an active appeal, we will update as events warant