587 B.R. 211
Bankr. D. Mass.2018Background
- Debtor and spouse Patricia took title to Massachusetts property; Patricia later became sole title owner. Patricia obtained a reverse mortgage from Financial Freedom; most loan docs were signed only by Patricia, but both signed the mortgage itself.
- The mortgage and note defined events of default (including death of a borrower) that could accelerate the loan and permit foreclosure; the mortgage’s signature block showed both names with the designation "-Borrower."
- After Patricia died, lender (now CIT) demanded full repayment; Debtor did not pay and filed Chapter 13 before any foreclosure sale. Debtor scheduled the property as an asset and proposed a plan that did not pay the loan in full.
- Debtor sued seeking a declaratory judgment that he is a "Borrower" under the mortgage (which would prevent foreclosure while he resides), plus breach of contract and Chapter 93A claims; CIT moved for summary judgment and for relief from the automatic stay and objected to confirmation of the plan.
- Key contemporaneous loan documents (loan application, loan agreement, note, settlement statement, borrower/non-borrower acknowledgments, non-borrower certification) consistently identify Patricia as the "Borrower" and the Debtor as a non-borrowing spouse, except the mortgage signature block where both signed.
- Court treated the documents as an integrated transaction, resolved any ambiguity by reading all documents together, and found as a matter of law that Debtor is not a "Borrower." Court sustained CIT’s plan objection, granted stay relief, and granted summary judgment for CIT.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor is a "Borrower" under the reverse mortgage | Debtor says his signature next to "Borrower" on the mortgage creates ambiguity and, under contra proferentem, he should be a borrower | CIT says all loan documents read together identify only Patricia as borrower; Debtor was non-borrowing spouse | Debtor is not a borrower; integrated documents show Patricia alone was borrower |
| Whether HUD insurance statute (12 U.S.C. §1715z‑20(j)) prevents foreclosure while surviving spouse occupies home | Debtor relies on federal statute and HUD policy to argue surviving spouse must be protected from foreclosure | CIT argues the HUD statute governs insurance eligibility, not enforceability of private contract terms or foreclosure rights | Court: statute does not alter contract enforceability here; it does not preclude foreclosure rights under these loan documents |
| Proper rule for construing an adhesion contract ambiguity | Debtor urges strict construction against drafter, adopting his interpretation | CIT urges objective reasonable-person interpretation using all transaction documents | Court applies Massachusetts rule: construe ambiguities against drafter but determine meaning an objectively reasonable non‑drafting party would give; here that meaning excludes Debtor as borrower |
| Whether Debtor can raise new factual theories at summary judgment (e.g., oral promise he could stay) | Debtor sought to raise new unpled factual claims in opposition | CIT argued new theories were too late and discovery closed | Court barred new theories as untimely; claims were predicated solely on borrower status and thus dismissed accordingly |
Key Cases Cited
- James B. Nutter & Co. v. Estate of Murphy, 478 Mass. 664, 88 N.E.3d 1133 (Mass. 2018) (reverse mortgages are adhesion contracts; ambiguities interpreted from perspective of reasonable non‑drafting party)
- Gilmore v. Century Bank & Trust Co., 20 Mass. App. Ct. 49, 477 N.E.2d 1069 (Mass. App. Ct. 1985) (contemporaneous instruments in one transaction are read together)
- Zanditon v. Feinstein, 849 F.2d 692 (1st Cir. 1988) (when multiple documents evidence a single transaction, they may be considered together to ascertain meaning)
- Lass v. Bank of America, N.A., 695 F.3d 129 (1st Cir. 2012) (under Massachusetts law, instruments deriving from a transaction shall be read together)
- F.D.I.C. v. Singh, 977 F.2d 18 (1st Cir. 1992) (several writings comprising parts of a single transaction will be read together)