Butler v. Deutsche Bank Trust Co. Americas
2014 U.S. App. LEXIS 6309
| 1st Cir. | 2014Background
- Butler borrowed $370,000 on January 31, 2007, secured by a mortgage listing MERS as mortgagee and nominee with power of sale.
- MERS assigned Butler's mortgage to Deutsche Bank (trustee for an unspecified trust) on December 1, 2009; assignment signed by Stephan and recorded.
- Deutsche Bank sought and obtained authority to foreclose in Massachusetts Land Court in 2010 under the Service Members Civil Relief Act.
- A second assignment from MERS to Deutsche Bank (as Trustee for RALI 2007QS3) occurred in January 2010 and was recorded; a further authority to foreclose was granted in 2011.
- A March 2011 third assignment again to Deutsche Bank for RALI 2007QS3 (a confirmatory filing) was recorded; foreclosure sale occurred May 25, 2011, with a second sale on March 8, 2012 after a potential defect in notice.
- Butler asserted multiple theories (notably lack of possession of the note and improper transfers), but the district court dismissed for failure to state a claim; on appeal, Butler pursues limitations on MERS’s authority, robo-signer issues, PSA compliance, note possession, and potential admission of invalidity, none of which yielded relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MERS had authority to transfer the mortgage. | Butler argues MERS lacked transferable interest as nominee. | Deutsche Bank validly possessed the mortgage; MERS could transfer its interest. | MERS had authority; transfers valid. |
| Whether the robo-signer signatories invalidate the assignments. | Stephan’s robo-signer status renders assignments invalid. | Robo-signing lacks a defined legal effect; assignments meet §54B requirements. | Robo-signing claim fails; assignments valid under §54B. |
| Whether the PSA in RALI 2007QS3 violated by Deutsche Bank affects possession. | Noncompliance with the PSA voids Deutsche Bank's possession. | Transfer through intermediaries or timely assignment passes title; standing issues are governing. | Under Massachusetts law, PSA violations render claims voidable, not void; no standing to challenge. |
| Whether Deutsche Bank needed to possess the note to foreclose (Eaton/Galiastro applicability). | Massachusetts law requires possession of note at foreclosure; Eaton applies retroactively. | Pre-Eaton rule allowed foreclosures without note possession; Eaton/Galiastro limit retroactivity. | Butler's claim falls outside Eaton’s retroactive scope; DB did not lack valid title to foreclose. |
| Whether Deutsche Bank admitted invalidity of the first sale. | Bank stated the first sale “may be void” due to notice; constitutes admission. | Statement is non-binding, speculative; no notice deficiency pled in complaint. | No binding admission; claim insufficiently pled. |
Key Cases Cited
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (MERS can transfer its interest; mortgage can be transferred while note is separately tracked.)
- Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) (MERS's note-tracking does not negate its ability to transfer the mortgage.)
- Eaton v. Fed. Nat’l Mortg. Ass’n, 462 Mass. 569 (Mass. 2012) (Massachusetts requires reunification of mortgage and note after Eaton; retroactivity limited.)
- Galiastro v. Mortg. Elec. Registration Sys., Inc., 467 Mass. 160, 4 N.E.3d 270 (Mass. 2014) (Applies Eaton retroactively to cases on appeal at Eaton’s issuance; clarifies scope.)
- Aulson v. Blanchard, 83 F.3d 1 (1st Cir. 1996) (Pleadings must state plausible claims; avoid bare conclusions.)