UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
John J. Mudge, Jr. and Lisa Mudge
v. Civil No. 13-cv-421-JD Opinion No. 2014 DNH 223 Bank of America, N.A. and TD Bank, N.A.
O R D E R
John J. Mudge, Jr. and Lisa Mudge move, pursuant to Federal
Rule of Civil Procedure 59(e), to alter or amend the judgment
entered in favor of the defendants. In support, they point to
newly discovered evidence and argue that the court made errors in
granting summary judgment in favor of Bank of America. Bank of
America objects.
Standard of Review
Rule 59(e) allows a motion to alter or amend a judgment
within twenty-eight days of the date the judgment was entered.
To succeed on a motion under Rule 59(e), a party must show that
the judgment is wrong because of a manifest error of law or fact,
an intervening change in controlling law, or newly discovered
evidence. In re Genzyme Corp. Securities Litig., 754 F.3d 31, 46
(1st Cir. 2014); Markel Am. Ins. Co. v. Diaz-Santiago, 674 F.3d
21, 32 (1st Cir. 2012). A party cannot “introduce new evidence
or advance arguments that could and should have been presented to
the district court prior to judgment.” Alicea v. Machete Music,
744 F.3d 773, 781 (1st Cir. 2014). Discussion
The Mudges recently discovered that Bank of America recorded
a “Discharge of Mortgage” for their mortgage on August 21, 2014.
They argue that Bank of America’s failure to disclose the
recording of the discharge is a discovery violation and that the
discharge shows that Bank of America was the holder of the note
and was not merely the servicer.1 The Mudges also argue that the
court’s summary judgment order was based on factual and legal
errors.
A. Discharge of Mortgage
The Mudges primarily argue that Bank of America failed to
comply with their discovery obligations by not disclosing the
discharge and that the failure to provide discovery requires
overturning the summary judgment order. The Mudges cite no
authority to support that theory, and the court has found none
that might apply in this context. In its objection to the
Mudges’ motion to alter or amend judgment, Bank of America
acknowledges that the recently recorded discharge is newly
discovered evidence within the meaning of Rule 59(e).
To succeed on their Rule 59(e) motion based on newly
discovered evidence, the Mudges must show that the discharge is
1 Although the Mudges state that the discharge shows that Bank of America was the holder of the note, the discharge actually says that Bank of America was the holder of the mortgage.
2 material in the context of summary judgment. See Aybar v.
Crispin-Reyes, 118 F.3d 10, 16 (1st Cir. 1997); In re Neurontin
Marketing & Sales Practices Litig., 799 F. Supp. 2d 110, 113 (D.
Mass. 2011). For that purpose, the Mudges state that “the
discharge reveals who the holder of the note here is. The
discharge contradicts BOA’s position as to who the holder is (by
definition the holder of the note is stated on the discharge).”
Bank of America moved for summary judgment on the Mudges’
claims of breach of contract and breach of the duty of good faith
and fair dealing solely on the ground that during the time Bank
of America held the mortgage, between September 21, 2011, and
October 19, 2011, no breach of contract or breach of the duty of
good faith and fair dealing occurred. In granting summary
judgment on those claims, the court stated that “[t]he record
evidence demonstrates, and the Mudges do not dispute, that MERS
assigned the mortgage to Bank of America on September 21, 2011,
and that Bank of America assigned the mortgage to Federal
National Mortgage Association on October 19, 2011.” Doc. no. 72
at 11. The court further held that Bank of America could be
liable for a breach of the mortgage agreement only while it was a
party to the mortgage agreement, that is, when it was the holder
of the mortgage between September 21 and October 19, 2011. The
court concluded that Bank of America did not breach the terms of
the mortgage or the duty of good faith and fair dealing during
that period, and granted Bank of America’s motion for summary
judgment on those claims (Counts I and IV).
3 In its objection to the Mudges’ motion to alter or amend
judgment, Bank of America states that the Mudges’ argument that
the discharge tends to show that it was the holder of the Mudges’
mortgage “is pure conjecture and contradicted by the evidence
submitted on summary judgment and the recordings in the Merrimack
Country Registry of Deeds.” In support, Bank of America invites
the court to compare its entire memorandum of law in support of
summary judgment with the Mudges’ memorandum objecting to summary
judgment. By way of further support, Bank of America states in a
footnote: “The validity of the recently recorded discharge is,
at best, doubtful, because it was not executed by the holder of
the mortgage, Federal National Mortgage Association, and was
erroneously executed by Defendant.” Bank of America does not
deny that it recorded the discharge or provide specific evidence
to show that the discharge is invalid.
The recently recorded discharge undermines the factual
basis for summary judgment on the breach of contract and breach
of the duty of good faith and fair dealing claims. Contrary to
the evidence Bank of America provided for purposes of summary
judgment, the discharge states:
For value received, Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP, holder of a mortgage from JOHN H MUDGE JR, LISA S MUDGE to Mortgage Electronic Registration Systems, Inc., dated 01/27/2003 and recorded in MERRIMACK County Registry of Deeds, for the state of New Hampshire in Book 2458, Page 1795, hereby discharges said mortgage.
Motion (doc. no. 76), Exhibit 1 (emphasis added). The discharge
is signed by Jesse Lester, Assistant Vice President at Bank of
4 America and is notarized. On its face, the discharge creates a
factual dispute as to when Bank of America was the holder of the
mortgage for purposes of the Mudges’ breach of contract and
breach of the duty of good faith and fair dealing claims.2
Because the court granted summary judgment in favor of Bank of
America on those claims based on facts that are now disputed,
that part of the summary judgment order must be vacated.
In vacating summary judgment on the claims of breach of
contract and breach of the duty of good faith and fair dealing
due to newly discovered evidence, the court is not ruling on the
merits of those claims either in light of the discharge or on any
other grounds. The ruling in this order is limited to the issue
of what effect the discharge has on the validity of the summary
judgment that was entered on those claims. Therefore, whether
the claims can be proven and whether they can be resolved on
summary judgment are open issues.
B.
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
John J. Mudge, Jr. and Lisa Mudge
v. Civil No. 13-cv-421-JD Opinion No. 2014 DNH 223 Bank of America, N.A. and TD Bank, N.A.
O R D E R
John J. Mudge, Jr. and Lisa Mudge move, pursuant to Federal
Rule of Civil Procedure 59(e), to alter or amend the judgment
entered in favor of the defendants. In support, they point to
newly discovered evidence and argue that the court made errors in
granting summary judgment in favor of Bank of America. Bank of
America objects.
Standard of Review
Rule 59(e) allows a motion to alter or amend a judgment
within twenty-eight days of the date the judgment was entered.
To succeed on a motion under Rule 59(e), a party must show that
the judgment is wrong because of a manifest error of law or fact,
an intervening change in controlling law, or newly discovered
evidence. In re Genzyme Corp. Securities Litig., 754 F.3d 31, 46
(1st Cir. 2014); Markel Am. Ins. Co. v. Diaz-Santiago, 674 F.3d
21, 32 (1st Cir. 2012). A party cannot “introduce new evidence
or advance arguments that could and should have been presented to
the district court prior to judgment.” Alicea v. Machete Music,
744 F.3d 773, 781 (1st Cir. 2014). Discussion
The Mudges recently discovered that Bank of America recorded
a “Discharge of Mortgage” for their mortgage on August 21, 2014.
They argue that Bank of America’s failure to disclose the
recording of the discharge is a discovery violation and that the
discharge shows that Bank of America was the holder of the note
and was not merely the servicer.1 The Mudges also argue that the
court’s summary judgment order was based on factual and legal
errors.
A. Discharge of Mortgage
The Mudges primarily argue that Bank of America failed to
comply with their discovery obligations by not disclosing the
discharge and that the failure to provide discovery requires
overturning the summary judgment order. The Mudges cite no
authority to support that theory, and the court has found none
that might apply in this context. In its objection to the
Mudges’ motion to alter or amend judgment, Bank of America
acknowledges that the recently recorded discharge is newly
discovered evidence within the meaning of Rule 59(e).
To succeed on their Rule 59(e) motion based on newly
discovered evidence, the Mudges must show that the discharge is
1 Although the Mudges state that the discharge shows that Bank of America was the holder of the note, the discharge actually says that Bank of America was the holder of the mortgage.
2 material in the context of summary judgment. See Aybar v.
Crispin-Reyes, 118 F.3d 10, 16 (1st Cir. 1997); In re Neurontin
Marketing & Sales Practices Litig., 799 F. Supp. 2d 110, 113 (D.
Mass. 2011). For that purpose, the Mudges state that “the
discharge reveals who the holder of the note here is. The
discharge contradicts BOA’s position as to who the holder is (by
definition the holder of the note is stated on the discharge).”
Bank of America moved for summary judgment on the Mudges’
claims of breach of contract and breach of the duty of good faith
and fair dealing solely on the ground that during the time Bank
of America held the mortgage, between September 21, 2011, and
October 19, 2011, no breach of contract or breach of the duty of
good faith and fair dealing occurred. In granting summary
judgment on those claims, the court stated that “[t]he record
evidence demonstrates, and the Mudges do not dispute, that MERS
assigned the mortgage to Bank of America on September 21, 2011,
and that Bank of America assigned the mortgage to Federal
National Mortgage Association on October 19, 2011.” Doc. no. 72
at 11. The court further held that Bank of America could be
liable for a breach of the mortgage agreement only while it was a
party to the mortgage agreement, that is, when it was the holder
of the mortgage between September 21 and October 19, 2011. The
court concluded that Bank of America did not breach the terms of
the mortgage or the duty of good faith and fair dealing during
that period, and granted Bank of America’s motion for summary
judgment on those claims (Counts I and IV).
3 In its objection to the Mudges’ motion to alter or amend
judgment, Bank of America states that the Mudges’ argument that
the discharge tends to show that it was the holder of the Mudges’
mortgage “is pure conjecture and contradicted by the evidence
submitted on summary judgment and the recordings in the Merrimack
Country Registry of Deeds.” In support, Bank of America invites
the court to compare its entire memorandum of law in support of
summary judgment with the Mudges’ memorandum objecting to summary
judgment. By way of further support, Bank of America states in a
footnote: “The validity of the recently recorded discharge is,
at best, doubtful, because it was not executed by the holder of
the mortgage, Federal National Mortgage Association, and was
erroneously executed by Defendant.” Bank of America does not
deny that it recorded the discharge or provide specific evidence
to show that the discharge is invalid.
The recently recorded discharge undermines the factual
basis for summary judgment on the breach of contract and breach
of the duty of good faith and fair dealing claims. Contrary to
the evidence Bank of America provided for purposes of summary
judgment, the discharge states:
For value received, Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP, holder of a mortgage from JOHN H MUDGE JR, LISA S MUDGE to Mortgage Electronic Registration Systems, Inc., dated 01/27/2003 and recorded in MERRIMACK County Registry of Deeds, for the state of New Hampshire in Book 2458, Page 1795, hereby discharges said mortgage.
Motion (doc. no. 76), Exhibit 1 (emphasis added). The discharge
is signed by Jesse Lester, Assistant Vice President at Bank of
4 America and is notarized. On its face, the discharge creates a
factual dispute as to when Bank of America was the holder of the
mortgage for purposes of the Mudges’ breach of contract and
breach of the duty of good faith and fair dealing claims.2
Because the court granted summary judgment in favor of Bank of
America on those claims based on facts that are now disputed,
that part of the summary judgment order must be vacated.
In vacating summary judgment on the claims of breach of
contract and breach of the duty of good faith and fair dealing
due to newly discovered evidence, the court is not ruling on the
merits of those claims either in light of the discharge or on any
other grounds. The ruling in this order is limited to the issue
of what effect the discharge has on the validity of the summary
judgment that was entered on those claims. Therefore, whether
the claims can be proven and whether they can be resolved on
summary judgment are open issues.
B. Factual Error
The Mudges also contend that the court made a factual error
in the context of Bank of America’s motion for summary judgment
on the breach of contract claim. Specifically, the Mudges charge
that the court’s statement that “the Mudges had not made their
monthly mortgage payments from sometime in 2009 until May of
2 That is, the discharge states that Bank of America was the holder of the mortgage on August 19, 2014, the date of the discharge, which contradicts Bank of America’s assertion that it was the holder of the mortgage only during the period between September 21 and October 19, 2011.
5 2011" was incorrect. They assert that they made thirty-two
regular payments between August 7, 2009, and September 11, 2011.
In support, they cite “Exhibit 3 (Mudge Home Loan Account
Statement) attached hereto.”
Exhibit 3, however, is a letter from Paul Descoteaux to
Matthew J. and Heidi S. Carlone and a purchase and sale
agreement. None of the exhibits attached to the motion for
reconsideration appears to include an account statement.
Therefore, the Mudges have not shown that the record relied on by
the court was incorrect.
Further, the Mudges alleged in their complaint that they
stopped making their mortgage payments after June of 2009. They
then alleged that they made “numerous payments between May 2011
and September 2011" but that at least some payments were returned
to them. Bank of America stated in its memorandum in support of
its motion for summary judgment that the Mudges stopped making
mortgage payments in 2009. The Mudges not only did not challenge
that statement in their objection, they stated that they stopped
making mortgage payments in 2009. Further, in support of its
objection to the Mudges’ motion for summary judgment, Bank of
America submitted a copy of the “Notice of Intent to Accelerate”
sent to the Mudges and dated September 20, 2010, which stated
that the loan was in serious default because required payments
had not been made.
Therefore, the Mudges have not shown that the court’s
statement about their failure to make mortgage payments was a
6 manifest error of fact. Because summary judgment is vacated on
the breach of contract and breach of the duty of good faith and
fair dealing claims, however, the record is open as to what facts
pertain to those claims.
C. Legal Error - Mootness
The Mudges state that the court erred in concluding that
because they sold their home their claims were moot. They
contend, citing County Motors, Inc. v. Gen. Motors Corp., 278
F.3d 40, 43 (1st Cir. 2002), that a case cannot be moot as long
as the court can provide relief. The Mudges cite pages seventeen
and eighteen of the summary judgment order, arguing that “[t]he
court incorrectly concluded there was no injury, however, the
delay alone cost them $90,000.”
On pages seventeen and eighteen, the court addressed Bank of
America’s motion for summary judgment on the Mudges’ claim for
negligent misrepresentation. The court concluded that the record
evidence showed that Bank of America was entitled to summary
judgment because the Mudges had not shown that the representation
they alleged about loan modification was false or that they
relied on a statement about referral to foreclosure. The court
also stated that the Mudges had not shown how reasonable reliance
on the foreclosure statement would cause any injury.
In the section of the order cited by the Mudges, there is no
mention of the sale of the Mudges’ home or any discussion of
7 mootness. Therefore, the Mudges’ claim of legal error is
misplaced.
By way of further explanation, the Mudges, who are
represented by counsel, assert that “[t]he foreclosure action was
the triggering event that caused all the harm” and that
“[b]ecause BOA did not foreclose, they put in motion the notice
that started the entire dance, it is their fault under contract
law, and a triggering event, at least plaintiff should be able to
recover direct damages . . . that is if BOA here had simple [sic]
performed properly and at a minimum timely provided the payoff
calculations and proper information st [sic] the time of the
offer to purchase in 2011 or 2012.” The Mudges also state that
the “court found that because the property was sold the claim was
moot. However, no waiver or release was signed, no law imposes a
release or waiver of their rights.” These additional arguments,
which are far from clear, do not appear to be related to the
issue of mootness with respect to the misrepresentation claim.
In addition, the Mudges appear to be making new arguments
that were not raised in their motion for summary judgment or in
opposition to Bank of America’s motion.3 They have not shown that
these matters could not have been presented for purposes of
opposing summary judgment. Therefore, these arguments are not
appropriate for purposes of a motion under Rule 59(e).
3 The Mudges refer to the amended complaint filed on March 18, 2014, which was struck on May 27, 2014, and is of no force or effect in this case. The operative complaint is the “Second Amended Complaint for Damages” filed in state court.
8 D. Legal Error - Note
The Mudges assert that summary judgment was improper because
Bank of America “has never produced the physical note.” They
argue that under New Hampshire law “possession of the Note
governs the rights of the mortgagee.” They further state that a
foreclosure cannot proceed unless the moving party is the owner
and holder of the note.
As the court has explained repeatedly, this case is not
about a foreclosure. The foreclosure was enjoined and never
occurred. Therefore, the New Hampshire law pertaining to
foreclosure is inapposite to the summary judgment entered in this
case. Similarly, the Mudges’ concerns about the location of the
note are not relevant to the claims they brought against Bank of
America.4
Conclusion
For the foregoing reasons, the plaintiff’s motion to alter
or amend judgment (document no. 76) is granted to the extent that
the summary judgment entered on the breach of contract and breach
of the duty of good faith and fair dealing claims against Bank of
America, Counts I and IV, in the order entered on August 27,
2014, (document no. 72) is vacated. The motion to alter or amend
judgment is otherwise denied.
4 The Mudges did not allege a claim for wrongful attempted foreclosure. Even if they had, however, the court is not aware of New Hampshire law that would support such a claim. See Worrall v. Fed. Nat’l Mortg. Ass’n, 2013 WL 6095119, at *3 (D.N.H. Nov. 20, 2013).
9 Judgment entered on September 4, 2014, (document no. 74) is
vacated.
Because the case is now reopened as to the breach of
contract and breach of the duty of good faith and fair dealing
claims, Counts I and IV, based on newly discovered evidence, the
discovery plan (document no. 20, approved on January 24, 2014) is
amended as follows:
The deadline for fact discovery, limited to Counts I and IV,
is reset to December 1, 2014.
The deadline for motions for summary judgment is reset to
December 15, 2014.
The trial will be reset for the trial period beginning March
3, 2015.
SO ORDERED.
____________________________ Joseph A. DiClerico, Jr. United States District Judge
October 24, 2014
cc: Peter G. McGrath, Esq. William Philpot, Jr., Esq.