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Fox v. Ocwen Loan Servicing, LLC

United States District Court, D. New Hampshire

May 6, 2019

Gail Fox and Ralph Wass
v.
Ocwen Loan Servicing, LLC and HSBC Bank USA, N.A., as Trustee for SG Mortgage Securities Trust 2006-OPT2, Asset Backed Certificates, Series 2006-OPT2

          ORDER

          JOSEPH A. DICLERICO, JR. UNITED STATES DISTRICT JUDGE.

          Gail Fox and Ralph Wass brought suit in state court to enjoin the foreclosure sale of their home in Goffstown, New Hampshire.[1] Ocwen Loan Servicing, LLC and HSBC Bank USA, N.A., as trustee, removed the case to this court. The defendants move for summary judgment, and Fox and Wass object.

         Standard of Review

         Summary judgment is appropriate 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 Thomas v. Harrington, 909 F.3d 483, 490 (1st Cir. 2019). For purposes of summary judgment, the court considers the facts in the light most favorable to the plaintiffs and draws all reasonable inferences in their favor. Roy v. Correct Care Solutions, LLC, 914 F.3d 52, 57 (1st Cir. 2019). “An issue is genuine if it can be resolved in favor of either party, and a fact is material if it has the potential of affecting the outcome of the case.” Leite v. Gergeron, 911 F.3d 47, 52 (1st Cir. 2018) (internal quotation marks omitted). “A genuine issue of material fact only exists if a reasonable factfinder, examining the evidence and drawing all reasonable inferences helpful to the party resisting summary judgment, could resolve the dispute in that party's favor.” Town of Westport v. Monsanto Co., 877 F.3d 58, 64-65 (1st Cir. 2017) (internal quotation marks omitted); Flood v. Bank of Am. Corp., 780 F.3d 1, 7 (1st Cir. 2015).

         Background

         Gail Fox and Ralph Wass acquired property in Goffstown, New Hampshire, on June 27, 2006. On July 21, 2006, Wass signed a promissory note in the amount of $236, 000 to Option One Mortgage Corporation, and Wass and Fox granted a mortgage on the property to Option One Mortgage Corporation to secure the loan.

         Option One changed its name to Sand Canyon Corporation on May 28, 2009. Sand Canyon assigned the Fox-Wass mortgage to HSBC as trustee on April 8, 2010. Option One endorsed the Wass note in blank and transferred the note to HSBC Bank, as trustee.

         The president of Sand Canyon, Dale M. Sugimoto, filed an affidavit in a bankruptcy case in the Eastern District of Louisiana on March 18, 2009. In the affidavit, Sugimoto stated that Option One's mortgage loan servicing business was sold to American Home Mortgage Servicing, Inc., effective as of April 30, 2008, and that as of January 31, 2008, Option One “ceased all loan origination activities.” Doc. 43-6, at 3. Sugimoto also stated that Sand Canyon's business then involved “dealing with litigation claims, including title issues or litigation relating to servicing prior to the sale of OOMC's servicing rights to AHMS.” Id.

         In their complaint, Fox and Wass alleged that the assignment of their mortgage by Sand Canyon to HSBC Bank in April of 2010 was invalid because, based on Sugimoto's affidavit, Sand Canyon did not own the mortgage when it was assigned. They asked for time to examine the mortgage to determine whether the defendants were foreclosing based on the mortgage that they signed. They asked to have HSBC Bank produce the “wet signature” mortgage documents for their inspection.

         The defendants previously moved to dismiss the plaintiff's claims on the ground that the plaintiffs were judicially estopped from challenging the validity of the assignment of the mortgage based on their representations in bankruptcy proceedings filed in 2010 and 2013. The motion was denied. The parties participated in mediation in June of 2018, when the plaintiffs had the opportunity to examine the loan documents.

         Discussion

         The defendants move for summary judgment on all claims on the grounds that the mortgage was validly assigned to HSBC, which also holds the note. The plaintiffs object, asserting that material facts are in dispute that prevent summary judgment. Specifically, the plaintiffs now assert that the defendants have provided different versions of the mortgage note and that a later “confirmatory assignment” of the mortgage shows that the mortgage was not assigned to the defendants. The defendants address those arguments in their reply.

         A. Mortgage and Note

         The defendants contend that they are entitled to summary judgment on the plaintiffs' claim that they lack authority to foreclose. In support, they assert that HSBC Bank as trustee holds the note, which is endorsed in blank, and that the plaintiffs have admitted that they lack evidence that HSBC does not hold the ...


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