Bank of America, N.A. v. Casey

517 B.R. 1, 2014 U.S. Dist. LEXIS 136257, 2014 WL 4843985
CourtDistrict Court, D. Massachusetts
DecidedSeptember 26, 2014
DocketCivil Action No. 13-11975-GAO
StatusPublished
Cited by3 cases

This text of 517 B.R. 1 (Bank of America, N.A. v. Casey) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bank of America, N.A. v. Casey, 517 B.R. 1, 2014 U.S. Dist. LEXIS 136257, 2014 WL 4843985 (D. Mass. 2014).

Opinion

OPINION AND ORDER

O’TOOLE, District Judge.

This is an appeal from a ruling of a United States Bankruptcy Judge for the District of Massachusetts. In an adversary proceeding, the bankruptcy court granted summary judgment in favor of the trustee of the bankrupt estate, allowing the trustee to avoid Bank of America’s mortgage. The issue presented is whether an attorney’s affidavit, later recorded with the registry of deeds, can cure a material defect in the acknowledgment to a mortgage that existed at the time the mortgage itself was recorded. The court ruled that under Massachusetts law the defect in the acknowledgement was not cured by the subsequently recorded affidavit.

I.Background

The debtor commenced a Chapter 7 case in July 2012. In September 2012, the trustee filed an adversary proceeding against Bank of America seeking to avoid the bank’s mortgage on the debtor’s property under the strong-arm provision of the Bankruptcy Code, 11 U.S.C. § 544(a). The parties filed cross-motions for summary judgment. The Bankruptcy Court granted summary judgment in favor of the trustee. Bank of America timely filed its notice of appeal.

The parties are in agreement as to the underlying facts. In 1999 the debtor and his wife (“the Pereiras”) purchased a property in New Bedford, Massachusetts. In December 2005, the Pereiras granted Bank of America a mortgage on the property. On the mortgage the Pereiras were identified as “Borrowers” and they initialed the bottom of each unsigned page and executed the document, which was witnessed by Attorney Raymond J. Quin-tín. The acknowledgment jurat at the end of the mortgage document, however, omitted the names of the Pereiras.

In an attempt to rectify the omission, Attorney Quintín recorded an affidavit with the Registry in January 2012, six months prior to the commencement of the bankruptcy case. In the affidavit, Attorney Quintín certified that he witnessed the Pereiras’ signatures on the mortgage, that they provided him with satisfactory evidence of their identity, and that they acknowledged that they had signed the mortgage voluntarily.

II. Standard of Review

Rule 8013 of the Federal Rules of Bankruptcy Procedure provides that “[o]n an appeal the district court ... may affirm, modify, or reverse a bankruptcy judge’s judgment, order or decree or remand with instructions for further proceedings.” The Bankruptcy Court’s conclusions of law, including statutory construction, are subject to de novo review. Flynn v. Bankowski (In re Flynn), 402 B.R. 437, 441 (1st Cir. BAP 2009) (per curiam). This appeal does not seek review of any factual findings.

III. Discussion

In Mortg. Elec. Registration Sys., Inc. v. Agin, 2009 WL 3834002 (D.Mass. Nov. 17, 2009), this Court considered a related question. In that case, the acknowledgment in the mortgage suffered from the same defect as in this case; the debtor’s name was omitted. In light of the defect, the trustee filed an adversary complaint in the bankruptcy court to avoid the [3]*3mortgage. Id. The bankruptcy court granted summary judgment in favor of the trustee, and this Court affirmed that ruling on appeal. Id. at *3. The Court concluded that the omission of the mortgagor’s name in the acknowledgment was a material defect under Massachusetts law. Consequently, the defective record was not effective to provide constructive notice to subsequent purchasers. Id. at *2. This meant that the trustee, who has the rights and powers of a bona fide purchaser of real property, 11 U.S.C. § 544(a)(3), could not be charged with constructive notice of the mortgage and therefore could avoid the mortgage pursuant to his strong-arm powers, 11 U.S.C. § 544, and recover the value of the mortgage lien for the benefit of the estate under 11 U.S.C. § 550(a). Id.

Bank of America does not challenge that analysis here. Rather, conceding the original defect in the mortgage when recorded, it contends that the Quintín Affidavit, recorded before the bankruptcy, cured the defect and thus provided effective constructive notice of the mortgage to the world, including the trustee, by means of the registry record. Consequently, the bank argues, since the bankruptcy commenced several months thereafter, the trustee is not entitled to the status of a bona fide purchaser for purposes of § 544. It should be noted that this case is different in its facts from Agin in that there was no attempted correction before the trustee’s interest as a bona fide purchaser accrued.

The bank relies on Massachusetts General Laws ch. 183, § 5B, which provides:

Subject to section 15 of chapter 184,1 an affidavit made by a person claiming to have personal knowledge of the facts therein stated and containing a certificate by an attorney at law that the facts stated in the affidavit are relevant to the title to certain land and will be of benefit and assistance in clarifying the chain of title may be filed for record and shall be recorded in the registry of deeds where the land or any part thereof lies.

There is no dispute that the Quintín Affidavit meets the criteria set forth in this section. Nor is it contended that the affidavit is untrue. The disputed question is whether the affidavit is to be regarded as “of benefit and assistance in clarifying the chain of title” as it appears in the registry, within the meaning and purpose of § 5B. The bank contends that the affidavit “clarifies” that the Pereiras did in fact acknowledge the mortgage at the time of its execution and that their names had been omitted in the acknowledgement not because they had not acknowledged, but as the result of an oversight.

The trustee disagrees and contends that under Massachusetts law a defectively acknowledged mortgage cannot be legally recorded, see Mass. Gen. Laws ch. 183, § 29; Graves v. Graves, 72 Mass. (6 Gray) 391, 392-93 (1856), and thus cannot provide constructive notice of the encumbrance via the registry record. She argues that the sole method for curing a defective acknowledgment is found in Mass. Gen. Laws ch. 184, § 24, which provides:

When any owner of land the title to which is not registered, or of any interest in such land, signs an instrument in writing conveying or purporting to convey his land or interest, or in any manner affecting or purporting to affect his title thereto, and the instrument, whether or not entitled to record, is recorded, and indexed, in the registry of deeds for the district wherein such land is situated, and a period of ten years elapses [4]

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Related

Bank of America, N.A. v. Casey
52 N.E.3d 1030 (Massachusetts Supreme Judicial Court, 2016)
Bank of America, N.A. v. Casey (In Re Pereira)
791 F.3d 180 (First Circuit, 2015)

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Bluebook (online)
517 B.R. 1, 2014 U.S. Dist. LEXIS 136257, 2014 WL 4843985, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bank-of-america-na-v-casey-mad-2014.