Koufos v. U.S. Bank, N.A. ex rel. CFSB Mortgage Pass-Through Certificates Series 2005-CF1
939 F. Supp. 2d 40
D. Mass.2013Background
- Koufos refinanced his Medway, MA home loan with New Century Mortgage Corp in Jan 2005, executing a promissory note for $344,250 and granting a mortgage recorded Feb 2, 2005.
- New Century filed Chapter 11 in Apr 2007; as DIP it sold most mortgage assets in 2007, including to Ellington; remaining loans were largely acquired by Ellington in June 2007.
- In Apr 2009, SPS, via power of attorney for New Century, purported to assign Koufos’s note and mortgage to U.S. Bank as trustee for the Trust and recorded it; U.S. Bank then began foreclosure.
- Koufos’s bankruptcy in 2010 stayed foreclosure; in Oct 2011 the bankruptcy court lifted the stay and dismissed his challenge for lack of jurisdiction.
- Koufos filed suit in Apr 2012 challenging U.S. Bank’s foreclosure; defendants removed to federal court; the court granted in part and denied in part the motion to dismiss/strike, ruling on several counts and issues.
- The court’s decision allowed some claims to proceed (notably concerted-action conspiracy and unjust enrichment against SPS) while dismissing others (e.g., true-conspiracy, certain 93A, MCCCDA, and emotional-distress claims) and limiting Count III about trust-governing-document compliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to enforce loan documents | Koufos contends U.S. Bank lacked standing due to invalid assignment | Bank argues valid assignment via Trustee role and transfer complied with governing documents | Count II dismissed; Count III survives in part; standing theory resolved by assignment validity and Eaton precedent |
| Declaratory relief on standing to foreclose | Koufos seeks declaration that U.S. Bank cannot foreclose without valid assignment | Bank maintains authority to foreclose as mortgagee or proper holder | Count II dismissed; Count III limited and not foreclosed by this relief |
| Mass. Gen. L. 93A claim viability | Claim fits 93A despite pending foreclosure | No proper 93A demand letter; claim time-barred and lacking proper notices | Count IV dismissed (timeliness and demand-letter deficiency) |
| Civil conspiracy and unjust enrichment claims | Conspiracy (concerted-action) alleged; unjust enrichment against SPS viable | Need for underlying tort; true-conspiracy dismissed; unjust enrichment limited | Count V surviving for concerted-action theory; Count VI reinstated against U.S. Bank in amended judgment; true-conspiracy portion dismissed |
| MCCCDA and emotional distress claims | Disclosures and distress claims are valid challenges to foreclosure | Claims time-barred or inadequately pled | Count VII dismissed (MCCCDA) and Count VIII dismissed (IIED/NEID) |
Key Cases Cited
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (mortgagor may challenge assignment validity to negate mortgagee status)
- Eaton v. Fed. Nat. Mortg. Ass’n, 462 Mass. 569 (Mass. 2012) (mortgagee need not hold note to foreclose under old rule; Eaton prospective)
- U.S. Bank Nat. Ass’n v. Ibanez, 458 Mass. 637 (Mass. 2011) (foreclosure void where assignee lacked jurisdiction/authority)
- McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207 (1st Cir. 2012) (mortgagee foreclosure timing post-Eaton; 4-year hold on 93A timing)
- In re Bailey, 468 B.R. 464 (Bankr. D. Mass. 2012) (standing to challenge assignment where assignor lacked ownership)
- In re Lopez, 486 B.R. 221 (Bankr. D. Mass. 2013) (voidable vs void assignments; standing implications)
- Butler v. Deutsche Bank Trust Co. Americas, 2012 WL 3518560 (D. Mass. 2012) (assignment issues and trust-governing documents; voidable vs void)
- Westminster Nat. Bank v. Graustein, 270 Mass. 565 (Mass. 1930) (equitable conveyance issues; voidable vs void)