United States District Court, D. New Hampshire
Mark B. Galvin and Jenny Galvin,
EMC Mortgage Corporation, et al.
BENCH TRIAL DECISION: FINDINGS OF FACT AND RULINGS OF LAW No. 2014 DNH 192.
JOSEPH N. LAPLANTE, District Judge.
Plaintiffs Mark and Jenny Galvin filed this action in Rockingham County Superior Court seeking to enjoin defendant Bank of New York Mellon ("Mellon"), in its capacity as trustee for the holders of shares in a pool of securitized mortgages, from foreclosing a mortgage on their property in Rye, New Hampshire. Mellon and its co-defendants-the servicer of the plaintiffs' mortgage loan, EMC Mortgage Corp.; the original mortgagee, Mortgage Electronic Registration System ("MERS"); and Mellon's alleged predecessor as trustee, JPMorgan Chase Bank, N.A.- removed the action to this court, see 28 U.S.C. § 1441, which has jurisdiction under 28 U.S.C. § 1332 (diversity).
The plaintiffs' amended complaint, which they filed in this court following removal (and following the court's order granting the defendants' motion to dismiss as to 14 of the 15 claims in the original complaint, see Galvin v. EMC Mortg. Corp., 2013 DNH 053 ("Galvin I")), asserts claims for (1) a declaratory judgment that the defendants may not foreclose; (2) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq., by EMC; and (3) violation of the New Hampshire Consumer Protection Act, or "CPA, " N.H. Rev. Stat. Ann. Ch. 358-A, by all defendants. The plaintiffs waived the second of these claims before trial, see Pls.' Pretrial Statement (document no. 56) at 3, leaving only their claims for declaratory judgment and violation of the CPA.
After denying the parties' competing motions for summary judgment on these two remaining claims, see Galvin v. EMC Mortg. Corp., 2014 DNH 139 ("Galvin II"), the court conducted a one-day bench trial. The plaintiffs and defendants each submitted a set of proposed findings and rulings and a trial brief before trial; the parties also jointly submitted a pre-trial statement of agreed facts and a timeline of events. With the assistance of these materials, the court makes the following findings of fact and rulings of law, see Fed.R.Civ.P. 52(a), resulting in judgment for the defendants on both counts.
Findings of Fact
I. The note and mortgage
1. On August 22, 2005, Mark Galvin executed a promissory note in the amount of $2, 900, 000, payable to Metrocities Mortgage, LLC.
2. Defendants presented the original promissory note to the court for inspection at the bench trial. Plaintiffs did not question the genuineness of the note, a copy of which was entered into the record as defendants' exhibit A. The note consists of six numbered pages and a two-page "prepayment note addendum."
3. The sixth page of the note bears Galvin's signature. On the reverse of that page is an undated stamp that reads: "Without recourse pay to the order of JPMorgan Chase Bank, as Trustee." The stamp bears the signature of Sam Kobari, who is identified as an "AVP" of Metrocities.
4. The eight pages of the note and its addendum bear two hole punches at the top of each page, but are held together by a paperclip. Also attached to these pages by the paperclip is a single-page document titled "Allonge to Mortgage Note." This document is undated, but was prepared at some point in July 2014, after the stamp indorsing the note to "JPMorgan Chase Bank, as Trustee" was placed on the note.
5. The page titled "Allonge to Mortgage Note" recites the date and amount of the note, and identifies Galvin as the "mortgagor" and Metrocities as the payee. The page bears the signature of Cory J. Settoon, who is identified as a "Vice President" and "Authorized Officer" of "JPMorgan Chase Bank, N.A. f/k/a JPMorgan Chase Bank, as Trustee." It reads:
Pay to the order of The Bank of New York Mellon formerly known as The Bank of New York as successor Trustee to JPMorgan Chase Bank N.A. as Trustee for the Certificateholders of Structured Asset Mortgage Investments II Trust 2005-AR7 Mortgage Pass-Through Certificates, Series 2005-AR7
6. Frank Dean, a representative of JPMorgan, testified at trial that Cory Settoon is, indeed, a JPMorgan employee authorized to prepare allonges. Dean further testified to JPMorgan's belief that Mellon is entitled to enforce the note.
7. The note is secured by a mortgage on property at 17 Heather Drive in Rye, New Hampshire, which is the primary residence of Mark Galvin and his wife, Jenny. Both Galvins executed the mortgage, which was later recorded at the Rockingham County Registry of Deeds at Book 4537, Page 1719.
8. The mortgage names MERS as the mortgagee in its capacity "as nominee for [Metrocities and its] successors and assigns." In the mortgage, the Galvins acknowledge that "MERS is a separate corporation" from Metrocities, and agree to "mortgage, grant and convey" the mortgaged property "to MERS... and to the successors and assigns of MERS with mortgage covenants, and with power of sale."
9. On May 5, 2010, Beth Cottrell, Vice President of MERS, executed an assignment of the mortgage from MERS to "The Bank of New York Mellon... as successor Trustee to JPMorgan Chase Bank, N.A., as Trustee for the Certificate-holders of [the SAMI II Trust]." On May 20, 2010, the assignment was recorded at the Rockingham County Registry of Deeds at Book 5112, Page 0754.
II. Galvin's default and defendants' foreclosure attempts
10. Galvin initially had no difficulty making payments on the note, which were between $13, 000 and $14, 000 per month. In August 2008, however, Galvin was unexpectedly terminated from his job. According to Galvin, he was able to "hold things together" for a while, but in June 2009, he stopped making payments on the note.
11. When he began to experience difficulty making payments, Galvin contacted EMC, his servicer from nearly the outset of the loan, using the phone number provided on his monthly statements. EMC ultimately offered Galvin an agreement that he says he understood to be a loan modification (the "Repayment Agreement"). The terms of this agreement were memorialized in a written offer letter from EMC, which Galvin signed on September 27, 2009, and returned to EMC.
12. As the court discussed in its order on the motion to dismiss, despite Galvin's claimed understanding of the Repayment Agreement, that document's plain language "does not contain any promise by EMC regarding loan modification, " and "addresses only one exceedingly narrow subject: curing Mr. Galvin's delinquency." Galvin I, 2013 DNH 053, 12.
13. The Repayment Agreement recited that, due to Galvin's failure to make the payments for June, July, and August of 2009, the loan was nearly $42, 000 in arrears. The agreement called for Galvin to make six monthly payments of $9, 900 (for a total of $59, 400), with the last payment due in February 2010, to cure this delinquency. Galvin made all six payments as required.
14. While making payments under the Repayment Agreement to cure his delinquency, however, Galvin did not make any of the usual monthly payments due under the note. In March 2010, EMC sent Galvin a letter announcing that it intended to foreclose on the mortgage because he had "failed to pay the required monthly installments" on the note.
15. On April 27, 2010, Harmon Law Offices sent Galvin a letter informing him that EMC had retained it to foreclose on the mortgage. Harmon followed this letter up with another letter on May 18, 2010, informing him that it had scheduled a foreclosure sale for June 16, 2010. The May 18 letter claimed that the "mortgage is currently held by The Bank of New York Mellon... as successor Trustee to JPMorgan Chase Bank, N.A., as Trustee for the Certificateholders of [the SAMI II Trust]."
16. After he received these letters, and after a friend sent him a newspaper clipping advertising a foreclosure sale of the mortgaged property at Heather Drive, Galvin contacted EMC. He claims that EMC representatives assured him that the foreclosure sale would not go forward, and asked him to submit additional information. Consistent with these representations, no foreclosure sale took place in 2010.
17. Since making the final $9, 900 payment due under the Repayment Agreement in February 2010, Galvin has made no further payments on the note. In the intervening four-and-a-half years, Galvin also has not paid any taxes on ...