140 F. Supp. 3d 149
D. Mass.2015Background
- Plaintiff Lawrence F. Army, Jr. sued CitiMortgage seeking: (Count I) injunctive relief under the bankruptcy automatic stay, (Count II) declaratory judgment that CitiMortgage lacked authority to foreclose under Mass. Gen. Laws ch. 244, § 14, and (Count III) breach of quiet enjoyment.
- Defendant moved to dismiss Count I for lack of subject-matter jurisdiction and Counts II–III for failure to state a claim; the court previously granted dismissal of Counts I and III and denied dismissal of Count II.
- The central legal question was whether a mortgagee may foreclose under the statutory power of sale when the mortgagor’s personal obligation on the promissory note was discharged in bankruptcy.
- After the initial decision, the Massachusetts Supreme Judicial Court decided Christakis v. D’Arc, addressing whether judicial liens survive a Chapter 7 discharge and explaining that discharge extinguishes personal liability but not in rem enforcement of liens.
- The court sua sponte reconsidered Count II in light of Christakis, concluding that Massachusetts law allows enforcement of liens in rem after discharge, and therefore foreclosure under the statutory power of sale remains available.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a mortgagee may foreclose under Mass. Gen. Laws ch. 244, § 14 when the underlying promissory note was discharged in bankruptcy | Army: discharge renders the personal debt unenforceable and thus precludes statutory power-of-sale foreclosure | CitiMortgage: discharge eliminates personal liability but does not extinguish the mortgage lien; in rem enforcement (foreclosure) survives discharge | Court: Held foreclosure under statutory power of sale survives discharge; Count II fails and is dismissed |
Key Cases Cited
- Christakis v. D'Arc, 471 Mass. 365, 29 N.E.3d 823 (Mass. 2015) (discharge extinguishes personal liability but permits in rem enforcement of liens under state law)
- Eaton v. Fed. Nat. Mortg. Ass'n, 462 Mass. 569, 969 N.E.2d 1118 (Mass. 2012) (discussed the relationship between note discharge and mortgage enforcement)
- Johnson v. Home State Bank, 501 U.S. 78 (U.S. 1991) (a bankruptcy discharge removes personal liability but leaves the creditor’s right to foreclose intact)