Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

The states of Massachusetts and Rhode Island each tax the transfer of real estate. In separate actions, the Town of Johnston, Rhode Island and the Commissioners of Bristol County, Massachusetts (the municipalities) brought actions against Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (collectively, the entities), seeking declaratory judgments that the entities owed transfer taxes as well as money damages and equitable relief to recover the unpaid taxes. Federal district courts granted the entities’ motions to dismiss based on statutory exemptions from taxation. The municipalities appealed, arguing that a real property exception in the entities’ tax exemptions applies to the transfer taxes and that the exemptions themselves are unconstitutional. The First Circuit affirmed the dismissal of all claims, holding (1) the transfer taxes are not included in the real property exception to the entities’ tax exemptions; and (2) the tax exemptions are a constitutional exercise of Congress’ power under the Commerce Clause and do not violate the Tenth Amendment.View "Town of Johnston v. Fed. Housing Fin. Agency" on Justia Law

Defendant, a law firm, contracted with Plaintiff for Plaintiff to provide title insurance on two mortgages that Defendant took as security from a client indebted to Defendant. Upon foreclosure of liens that were superior to those of Defendant, Defendant sought coverage from Plaintiff under the insurance policies, which seemingly provided coverage for priority liens. Defendant requested indemnification, and Plaintiff sought declaratory judgment, arguing that coverage for priority liens was not intended by either party. A federal district court granted summary judgment in favor of Plaintiff, concluding that because Defendant was aware of the prior mortgages, it could not expect to receive coverage it did not bargain for. The First Circuit affirmed, holding that Plaintiff had conclusively shown that Defendant was aware that its bargain with the client for security of its debt would result in junior mortgages, and the insurance policies clearly excluded such encumbrances from coverage.View "First Am. Title Ins. Co. v. Lane Powell PC" on Justia Law

Attorney Valeriano Diviacchi represented Camilla Warrender in an action brought against Warrender by her mortgagee, Sovereign Bank, which sought to collect on a loan secured by certain real property. Shortly after Diviacchi entered his appearance, Warrender, without Diviacchi’s assistance, agreed to a settlement pursuant to a stipulation that Warrender’s property be sold to a third party. Diviacchi filed a notice of attorney’s lien pursuant to Mass. Gen. Laws ch. 221, 50 (section 50). The property was subsequently sold to a third-party, and Sovereign Bank dismissed its claims against Warrender. The district court denied the motion to enforce the attorney’s lien, concluding that the lien was not enforceable under section 50 because Diviacchi “failed to make a showing that he incurred reasonable fees and expenses….” The First Circuit affirmed, holding that Diviacchi’s lien was not legally enforceable against the sale proceeds.View "Sovereign Bank v. Diviacchi" on Justia Law

Plaintiff alleged that he was the victim of a fraudulent scheme in which he allowed an attorney to take title to his home and strip it of its equity by granting a new mortgage. Plaintiff filed suit against the mortgagee in an effort to avoid foreclosure. A federal district court granted Defendants’ motion to dismiss for failure to state a claim that the mortgage was void. The district court denied Plaintiff’s subsequent motion to amend his complaint. The First Circuit affirmed the dismissal of Plaintiff’s complaint and the denial of his motion for leave to amend, holding (1) Plaintiff’s complaint provided no legal basis for making the bank liable for the attorney’s wrongdoing; and (2) Plaintiff failed adequately to plead facts supporting his proposed amendments to his complaint, and therefore, his new claims were also futile.View "Giuffre v. Deutsche Bank Nat’l Trust Co." on Justia Law

Appellant entered into a mortgage contract with Pawtucket Credit Union (PCU) for the purchase of real property in Rhode Island. The mortgage agreement included a private contractual remedy, authorized by R. I. Gen. Laws 34-11-22, that allowed PCU, in the event Appellant defaulted on her loan payments, to accelerate its loan and invoke its statutory power of sale. PCU later declared Appellant in default, invoked its statutory power of sale, and began the foreclosure process. Appellant filed suit against PCU in federal district court, alleging that foreclosure pursuant to section 34-11-22 violated her federal and state due process rights. The district court dismissed the case for lack of subject matter jurisdiction. The First Circuit Court of Appeals affirmed, holding that none of the statutory bases cited in Appellant’s complaint conferred federal jurisdiction. View "Grapentine v. Pawtucket Credit Union" on Justia Law

In 2006, Plaintiff refinanced her home in Massachusetts. The mortgage contract identified MortgageIT as the lender and Mortgage Electronic Registration Systems (MERS) as the mortgagee. MortgageIT sold Plaintiff’s note, which changed hands several times before being deposited into a Trust, of which U.S. Bank was trustee. MERS assigned the mortgage to OneWest Bank. Following the 2011 foreclosure on her home, Plaintiff filed suit against U.S. Bank, OneWest, and MERS, contending that OneWest was never assigned valid legal title, rendering the foreclosure void. The district court dismissed Plaintiff’s suit for failure to state a claim, finding that the First Circuit’s decision in Culhane v. Aurora Loan Services of Nebraska was fatal to Plaintiff’s claim. Plaintiff appealed, challenging the district court’s reliance on Culhane. The First Circuit affirmed, holding that Culhane was on point, as Plaintiff’s argument was a variation of the same challenge raised in Culhane. View "Mills v. U.S. Bank N.A." on Justia Law

Plaintiff purchased property with a mortgage from Countrywide Home Loans, Inc. In October 2006, Plaintiff took out a loan from Countrywide to cure his breach of a divorce agreement. In December 2006, Plaintiff took out a home equity loan from Countrywide. Because Plaintiff was not able to make payments on his October 2006 loan, Countrywide foreclosed on his property. In May 2009, Plaintiff filed a complaint alleging claims of unjust enrichment, rescission/equitable relief, breach of the implied covenant of good faith and fair dealing, violations of Mass. Gen. Laws ch. 93A, and negligence. Countrywide removed the case to federal court. The district court resolved certain claims as a matter of law and, after a bench trial on the remaining claims, entered judgment in favor of Countrywide. The First Circuit Court of Appeals affirmed, holding that no grounds exited for reversing any of the district court’s decisions. View "Frappier v. Countrywide Home Loans, Inc." on Justia Law

Plaintiff obtained a loan secured with a promissory note and mortgage on his Massachusetts home. The mortgage document listed Mortgage Electronic Registration Systems (MERS) as mortgagee and nominee for the lender’s successors and assigns. MERS subsequently assigned Butler’s mortgage to Deutsche Bank Trust Company Americas (Deutsche Bank). Deutsche Bank foreclosed on Plaintiff’s home. Plaintiff filed suit against Deutsche Bank for wrongful foreclosure, slander of title, and unfair and deceptive business practices under Massachusetts law, alleging that Deutsche Bank lacked legal possession over both his mortgage and accompanying note, making it an improper party to foreclose. The district court dismissed Plaintiff’s complaint for failure to state a claim, concluding that the foreclosure sales were in accordance with the relevant statutory law. The First Circuit Court of Appeals affirmed the district court’s decision to dismiss Plaintiff’s complaint, holding (1) Deutsche Bank need not have possessed Plaintiff’s note, and (2) Plaintiff failed to state any other colorable claim on which relief might be granted. View "Butler v. Deutsche Bank Trust Co. Ams." on Justia Law

Plaintiff refinanced his residential home mortgage, taking out a loan secured by his home. The mortgage listed Mortgage Electronic Registration Systems, Inc. (“MERS”) as the mortgagee of record. MERS subsequently transferred the mortgage. Wells Fargo Bank, N.A. as Trustee for RMAC Pass-Through Trust, eventually obtained the mortgage. After Wells Fargo sold Serra’s property at foreclosure, Serra brought suit in Massachusetts state court asserting, among other claims, claims for wrongful foreclosure and unfair or deceptive business practices based on his theory that MERS lacked the authority to transfer his mortgage. Serra’s suit was removed on the basis of diversity, and summary judgment as to all claims was entered against Serra. The First Circuit Court of Appeals affirmed, holding (1) under Massachusetts law, MERS may validly possess and transfer a legal interest in a mortgage; (2) subsequent mortgage assignees cannot incur liability for the allegedly predatory practices of their predecessor-in-interest; and (3) Plaintiff’s argument that his right to rescission was improperly cut short by the sale of his property was without merit. View "Serra v. Quantum Servicing Corp." on Justia Law

The IRS held a tax lien against Patrick Hannon’s property, including a parcel of land Hannon owned in Newton, Massachusetts. The IRS discharged that specific parcel from its tax lien under 26 U.S.C. 6325(b)(2)(A) to allow the City of Newton could take the property by eminent domain, and the IRS authorized the discharge upon its receipt of a portion of the amount paid by Newton. Following the taking, Hannon sued Newton in Massachusetts state court and was awarded damages for undercompensation. Both the government and Rita Manning, a lower-priority creditor who had obtained a judgment against Hannon, intervened and asserted priority to receive the damages award. A federal district court entered summary judgment in favor of Manning on the issue of whose lien had priority, concluding that the IRS’s decision to discharge the property from federal tax liens in exchange for payment from the taking meant the government had relinquished any tax lien on the later damages award. The First Circuit Court of Appeals reversed, holding (1) the IRS certificate issued under section 6325(b)(2)(A) did not release any claims the IRS had on the post-taking proceeds awarded to Hannon; and (2) the IRS tax lien on those post-taking proceeds was valid and thus senior to Manning’s judgment lien. View "Hannon v. United States" on Justia Law