Kelly v. DEUTSCHE BANK NAT. TRUST CO.
789 F. Supp. 2d 262
D. Mass.2011Background
- Kelly refinanced his mortgage on 12/30/2005 with Option One Mortgage (Sand Canyon).
- Deutsche Bank, as trustee, began foreclosure and set a sale for 2/16/2011.
- Kelly filed suit in 2/2011 and the case was removed to federal court on diversity grounds.
- Counts: I rescission under MCCCDA via recoupment; II lack of standing to foreclose; III challenge to PSA/assignment as third-party beneficiary.
- Court granted Deutsche Bank’s Rule 12(b)(6) motion, dismissing Counts I–III and closing the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kelly's rescission claim is time-barred by MCCCDA | Kelly relies on recoupment under §10(i)(3) not subject to 4-year limit | Right of rescission under §10(a) has four-year expiration after consummation | Count I barred; four-year limit applied; recoupment not affirmative relief. |
| Whether Deutsche Bank has standing to foreclose under MA law | Deutsche Bank is not holder of note but seeks to foreclose | Massachusetts foreclosure statute targets mortgagee; note holder not required | Count II dismissed for lack of standing to foreclose. |
| Whether Kelly has standing to challenge authority to foreclose under PSA as a third-party beneficiary | Kelly argues he is intended beneficiary of PSA despite not being party | Third-party beneficiary status requires clear intent to confer benefit | Count III dismissed for lack of standing as third-party beneficiary. |
Key Cases Cited
- Twombly, Bell Atl. Corp. v., 550 U.S. 544 (2007) (plausible entitlement to relief requires more than conclusory allegations)
- Berner v. Delahanty, 129 F.3d 20 (1st Cir.1997) (dismissal proper if pleadings lack sufficient factual allegations)
- Walsh v. Chestnut Hill Bank & Trust Co., 414 Mass. 283 (1993) (equitable considerations and restoration principles in rescission)
- Keville v. McKeever, 42 Mass. App. Ct. 140 (1997) (credit for payments may apply in rescission context)
- Bose Corp. v. Consumers Union of U.S., Inc., 367 Mass. 424 (1975) (recoupment doctrine limits to defense, not affirmative relief)
- Cumis Ins. Soc'y, Inc. v. BJ's Wholesale Club, Inc., 455 Mass. 458 (2009) (intentional beneficiary status requires clear contract intent)
- McCarthy v. Azure, 22 F.3d 351 (1994) (special clarity required for third-party beneficiary status)
- U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 (2011) (in Massachusetts, foreclose by mortgagee; assignment/PSA specifics distinguish some cases)
- First Nat'l Bank of Cape Cod v. N. Adams Hoosac Sav. Bank, 7 Mass.App.Ct. 790 (1979) (transfer of note with mortgage raises questions about foreclosure rights)