Indeed, we wrote a blog post on the Firm's decade long defense of the Starkey residence this past January 2019
Firm Successfully Argues Denial of Further Appellate Review In Starkey v. Deutsche Bank, N.T. Co.
Subsequent to remand, Deutsche Bank attempted to argue that it was now entitled to file a Motion for Judgment on the Pleadings, despite the clear Order of the Appeals Court allowing the Starkeys discovery
The pleadings involved with this Motion can be found below:
1.) Deutsche Bank N.T., et. al. Motion For Judgment on The Pleadings
2.) Firm Opposition To Deutsche Bank N.T., et. al MJOP
3.) Deutsche Bank, N.T. et al. Reply to Starkey Opposition
The Superior Court agreed with our position, and ruled from the bench that DB's Motion was denied, and entered this Judgment on October 22, 2019, which allows the Starkeys to continue with their requests for discovery.
See the docket sheet for the current Superior Court case, which has the decision and entry of this Order at the last entry in the PDF here
The Firm has had to take on two of the largest law firms in America during the decade long battle to keep the Starkey's in their residential abode; Morgan Lewis & Bockius, and Wilmer Hale.
We successfully argued a reversal of the Barnstable County Superior Court Decision dismissing the Starkey's complaint, when the Appeals Court issued its Opinion in Starkey v. Deutsche Bank, N.T., as Trustee, et. al, 94 Mass. App. 1 (Sept. 11, 2018) Subsequently, Deutsche Bank submtited a petition to the Massachusetts Supreme Judicial Court for Further Appellate Review ("FAR"), which sought the extraordinary relief to "appeal the appeal decision". The Firm Successfully argued denial of the FAR; DB Petition for FAR (from Wilmer Hale); Firm Opposition
In the appellate ruling we procured on behalf of the Starkeys, the Court specifically found that the Starkeys were entitled to discovery as to precisely how Deutsche Bank's claim that they owned the right to enforce the Starkey Note and Mortgage s Trustee on behalf of the WaMu Mortgage Pass Through Certificates Series 2006-AR1 Trust ("DB"), when DB claimed that it received an assignment of mortgage from JPMorgan Chase who acquired all assets of Washington Mutual Bank ("WaMu") from the FDIC in May 2009, where WaMu failed on September 28, 2008, and the Pooling and Servicing Agreement for the DB Trust states that the assets were transferred to the Trustee in 2006:
DB claimed that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183, the relevant portions of which are codified at 12 U.S.C. § 1821(c)-(l) (2006), ("FIRREA") required that the Starkeys initiate any claim related to the mortgage in Washington DC under the requirements of FIRREA prior to the "claim bar", and that the failure to have done so preempted the Starkeys from challenging the foreclosure in the Massachusetts state court. The Starkeys were never provided any notice that they were first required to challenge the claim of ownership under FIRRA, and despite the lack of notice that they could possibly be prevented from challenging the foreclosure as ruled upon by the Barnstable County Superior Court Judge.
The Appeals Court found as follows:
"As our description of the proceedings below suggests, there is, at least, a genuine issue of fact with respect to the ownership of the plaintiffs' mortgage loan in 2008. If, as the PSA suggests, the note and the mortgage were sold to the trust in 2006, they were no longer assets of Washington Mutual on the day it went into receivership. Both the note and the mortgage would have been the property of the trust since 2006, notwithstanding the transfer document recorded in May, 2009.
The Court ultimately ruled as follows:
"The plaintiffs also argue that, even if the mortgage loan was owned by Washington Mutual on the date of receivership or FIRREA otherwise applied, some or all of their claims would survive because they do not fall within the language of the statute as properly construed, in particular because declaratory judgments and affirmative defenses do not fall under FIRREA's definition of "claim." See Bolduc v. Beal Bank, SSB, 167 F.3d 667, 671-672 (1st Cir. 1999) (preemptive assertion of affirmative defense to foreclosure action not barred by FIRREA). See also, e.g., Beaton v. Land Court, 367 Mass. 385, 392 (1975) (fraud is defense to foreclosure). In light of our holding, and the fact that the motion judge was presented with the FIRREA argument only at the hearing on the motions to dismiss, so that these issues were not fully briefed before the motions were initially decided, we think the prudent course is to allow the Superior Court to address these issues on remand in the first instance, should it become necessary. [Note 8]
The corrected judgment is reversed and the case is remanded to the Superior Court for further proceedings consistent with this opinion.
At oral argument at the hearing, the Firm successfully argued that the Appeal Court decision was clear, in that the Starkeys were entitled to discovery as to DB's claimthat it received an assignment of the Starkey mortgage from the FDIC in 2009, when the PSA stated that the Trust could receive no assets after January 30,2006:
"Although the memoranda in support of the defendants' motions to dismiss, filed by a single attorney purporting to represent all the defendants, including JPMorgan Chase and the trust, did nothing to clarify the question of who owned the note and the mortgage at what times, the plaintiffs did append to an opposition memorandum a copy of the "Pooling and Servicing Agreement" (PSA), an agreement between WaMu Asset Acceptance Corp. as depositor of a set of assets (primarily mortgage loans), Washington Mutual Bank as servicer of those loans, Deutsche Bank as trustee of the trust, and Deutsche Bank Trust Company Delaware as Delaware trustee. Its inclusion suggests that the mortgage was securitized and sold to the trust long before Washington Mutual's insolvency. That document reveals that the trust obtained all its assets through a purchase from WaMu Asset Acceptance Corp., the set of assets being valued at over $1.5 billion. The PSA states that those assets include "Mortgage Loans" that would be conveyed to the trust on the closing date, January 30, 2006. "Mortgage Loan[]" is relevantly defined to include both the note and the mortgage. According to the PSA, the "Mortgage Files," which include the mortgage notes and recorded mortgages, endorsed or assigned respectively either in blank, to the trust, or to the trustee, were also to be delivered to the trust on January 30, 2006. The trust then issued a variety of classes of "certificates," each representing a fractional ownership interest in the bundle of Mortgage Loans that made up the trust assets, and the certificates were subsequently sold on the open market. The PSA appears to make no provision, and appears to grant the trust no authority, for acquisition of additional assets by the trust subsequent to the closing date." Starkey at p. 5
This case is crucially important in several respects.
First, this represents the first opportunity for a borrower to demand the production of the list of the specific assets that were owned by WaMu at the time of its Failure and takeover by the FDIC on September 28, 2008. Indeed, the Purchase and Assumption agreement ("PAA") between the FDIC and JPMorgan Chase has been the subject of much litigation, all without definitive finding. The PAA clearly states that only the "certain assets" of WaMu were taken over by the FDIC and sold to JPMorgan Chase. The PAA contains a notation of a "schedule of assets" but no asset is listed. Further there has been litigation in California that has identified that the publicly available PAA is 39 pages, but there may exist a 118 page longer document, see Jolly v. Chase Home Finance, 213 Cal.App.4th 872 (2013); 153 Cal. Rptr. 3d 546 We now have the Opportunity to explore this unanswered question that has lingered for over a decade.
Second, the Ruling in Starkey by the Appeals Court Panel puts a significant dent in the repeated findings that a borrower lacks "standing to challenge the PSA", such as Strawbridge v. The Bank of New York Mellon, 91 Mass. App. Ct. 827 (2017) and Ressler v. Deutsch Bank Americas as Trustee, & others, 92 Mass. App. Ct. 502 (2017); see also the dissent in Giannasca v. Deutsche Bank, N.T. Ca. No. 2018-P-0349; [currently pending FAR], Our Petition for FAR
In fact, the borrower does not make any "challenge to enforce the PSA", but merely seeks to defend the title to their real property. Indeed, the Appeals Court has already spoken to the claim that a borrower cannot "challenge assignments", and that the borrower does not seek to enforce any contract, seeSullivan v. Kondaur Capital Corp. 85 Mass. App. 202, 205-206 (2014):
"Standing of a mortgagor to challenge the validity of a mortgage assignment. Observing that the Sullivans are neither parties to nor intended beneficiaries of the first assignment or the second assignment, Kondaur contends that they are without standing to challenge the validity of either instrument. It is of course true that a nonparty who does not benefit from a contract generally is without standing to enforce rights under it. See, e.g., Cumis Ins. Soc., Inc. v. BJ's Wholesale Club, Inc., 455 Mass. 458, 464 (2009). However, that is not the position the Sullivans occupy, since they are not seeking to enforce any rights under either assignment. Instead, by their complaint they seek to challenge Kondaur's claim of title to the property the Sullivans formerly owned, which derives from foreclosure of the mortgage Kondaur claims to have acquired by virtue of the first and second assignments. Kondaur held legal authority to conduct the foreclosure, under the statutory power of sale contained in the mortgage, only if it held a valid title to the mortgage at the time it gave the notice of foreclosure required under G. L. c. 244, § 14, and at the time it exercised the power of sale. See U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637, 647-648 (2011). If it did not hold a valid title to the mortgage atthe relevant times, the foreclosure would be void, as would Kondaur's claim to have extinguished the Sullivans' equity of redemption. Id. Put another way, the legally cognizable interest the Sullivans seek to protect by their complaint is their ownership interest in the property, based on their claim that Kondaur's purported foreclosure was void by reason of its lack of legal authority to conduct it. [Note 7] We accordingly conclude that the Sullivans have standing to challenge the validity of the assignments by which Kondaur claims to have acquired the mortgage. [Note 8]"
Equally important is a review of Note 8 of Sullivan:
"[Note 8] We note that our conclusion that the Sullivans have standing to challenge Kondaur's title to the mortgage (and, consequently, its legal authority to foreclose their equity of redemption) is consistent with that of the United States Court of Appeals for the First Circuit in Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291 (1st Cir. 2013). Compare Wilson v. HSBC Mort. Servs., Inc., 744 F.3d 1, 14 (1st Cir. 2014) (no standing where homeowners' complaint alleged that officer who executed assignment on behalf of assignor was also an officer of assignee and executed assignment on behalf of the latter)."
The mantra from the financial bar for the past 7 years or so (as accepted by the Courts of the Commonwealth has been that a borrower can only challenge an assignment that is void (which is true). However, this proposition has metastasized into a claim that every challenge is only "voidable" and therefore the borrower can never make any challenge to an assignment under G.L. c. 183, 54B. Clearly such assumption by the financial bar is absurd, as G.L. c. 183, Section 54B requires first that assignment is legally valid, not void.as an agent could not bind a principal with no legal rights. An example would be the result in U.S.. Bank v. Ibanez, 458 Mass. 637 (SJC 2011), where the 2 assignments at issue in that matter were executed by agents in front of notaries, but were still found void due to a lack of title.
Note 8 of Sullivan above, clearly provides guidance that where the challenge to the assignment is only as to the signatory's "authority" to execute the assignment, such challenge would be "voidable",however where the borrower challenges the very title to the assignment itself, such challenge is VOID. Reviewing N. 8 of Sullivan leaves no doubt as to the truth of this defense.
In fact, if the financial bar position was correct, we could have never successfully argued the defense of the LaRace family in U.S. Bank N.A. v. Ibanez, 458 Mass. 637, (SJC 2011)
Remember this, when the "friendly" tall building law firm tries to shoot down your challenge to the assignment as "voidable", but remember, NEVER CHALLENGE THE SIGNATORY TO THE ASSIGNMENT, CHALLENGE THE TITLE!
The Starkey case is ongoing and in discovery. We will update this post with any new developments