550 B.R. 157
D. Mass.2016Background
- DeMores owned a North Attleboro property, with the deed recorded in March 1994.
- In April 2004, DeMores gave Molloy a limited power of attorney, and Molloy executed a promissory note to HSBC Mortgage Corp., secured by a mortgage on the property; HSBC later assigned the mortgage to HSBC.
- The Certificate of Acknowledgment stated that Andrew and Maureen DeMore appeared by their attorney-in-fact, Molloy, under the POA, and noted identification (drivers licenses).
- In October 2013 Andrew filed Chapter 7, followed by Maureen in December 2013; Trustee Lassman filed adversary proceedings in January 2014 to avoid the mortgage under 11 U.S.C. §§ 544(a)(3) and 551 based on alleged notarization defects.
- Bankruptcy Court granted Lassman’s summary-judgment motion and relied on In re Kelley, finding the mortgage was materially defective due to ambiguity about who appeared before the notary.
- HSBC appealed and sought certification of Massachusetts law questions to the Massachusetts Supreme Judicial Court; the district court certified issues but ultimately reversed the bankruptcy court and remanded for judgment consistent with its order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Certificate of Acknowledgment is materially defective | HSBC: defect renders mortgage voidable | Lassman: POA and identification evidence support voluntary execution | Not materially defective; allowance for appearance by attorney-in-fact |
| Whether MA Land Court registration cures the defect via constructive notice | Trustee may have constructive notice despite defect | Registration cures all defects | Not reached because the certificate was not found to be materially defective |
| Whether the Power of Attorney affected whose free act and deed governed the mortgage | POA permitted Molloy to acknowledge; DeMores’ act may be valid | Mortgage execution may be the DeMores’ free act via Molloy | POA language and certificate show DeMores appeared by attorney; notary evidence supports validity |
| Whether the court should certify Massachusetts law questions to the SJC | Certification advisable due to unresolved MA law | Certification unnecessary or inappropriate given the record | Certification denied |
| Whether a stay pending Pereira proceedings is appropriate | Stay to await Pereira guidance | Stay unlikely to produce timely resolution | Stay denied |
Key Cases Cited
- Bank of Am. v. Casey (In re Pereira), 791 F.3d 180 (1st Cir. 2015) (certification context for MA law; ambiguity in MA acknowledgment issues)
- Ramos v. Int'l Fid. Ins. Co., 87 Mass.App.Ct. 604, 34 N.E.3d 737 (Mass. App. Ct. 2015) (appearance and execution issues in MA context)
- In re Ryan, 851 F.2d 502 (1st Cir. 1988) (land recording formality principles and substance over form considerations)
- Smith v. F.W. Morse & Co., Inc., 76 F.3d 413 (1st Cir. 1996) (principles on formality in commercial/real property actions)
- Graves v. Graves, 72 Mass. 391 (Mass. 1856) (ancient precedent on registration and constructive notice)