Nickless v. HSBC Bank USA (In re Marron)
462 B.R. 364
| Bankr. D. Mass. | 2012Background
- Trustee filed a seven-count adversary proceeding seeking avoidance, subordination, or both related to a First Mortgage, a Confirmatory Mortgage, and a Second Mortgage on the Marrons’ property, all associated with MERS and Fieldstone, HSBC, and related entities.
- Mortgages were initially granted July 29, 2005; title stood in both spouses as tenants by the entirety; MERS acted as nominee and assigned/displayed on the First Mortgage and Second Mortgage.
- In 2009 HSBC sought to reform the deed and mortgage in Massachusetts Land Court; settlement led to a December 2009 order and a December 10, 2009 amendment naming MERS as mortgagee on the confirmatory deed.
- MERs’ assignment to HSBC occurred in 2009-2010; Fieldstone later underwent bankruptcy proceedings; C-Bass also filed for bankruptcy and abandonment actions related to Fieldstone assets.
- Trustee commenced the adversary proceeding March 9, 2011, asserting invalidity or subordination of the mortgages and related instruments and challenging related stay and equity claims.
- Judge dismissed all counts on motion to dismiss, concluding trustee lacks standing on key claims and that the mortgages, assignments, and related actions were not violative of the automatic stay or subject to equitable subordination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether First Mortgage and Confirmatory Mortgage can be declared invalid (Count I). | Soroko-Marron’s mortgage validity hinges on Fieldstone acceptance; claim should strip or invalidate lien. | Mortgages identified MERS as nominee and acceptance implied by recording; no Massachusetts requirement for explicit acceptance. | Count I dismissed; mortgages not invalid. |
| Whether Fieldstone’s rejection of its MERSCORP contract terminates MERS’s assignment rights (Count II). | Rejection terminates MERS’s authority to assign mortgages. | Rejection does not magically erase existing rights; assignments facially valid and binding. | Count II dismissed. |
| Whether MERS had power to assign (Count III). | MERS lacked license/authority to assign without court licensing. | Massachusetts law allows MERS to assign; assignments valid and trustee lacks standing to challenge. | Count III dismissed. |
| Whether trustee may use strong-arm powers to avoid the Mortgage (Count IV). | § 544 allows avoidance if assignments are invalid. | No basis for § 544 avoidance since underlying mortgage survives and trustee lacks standing. | Count IV dismissed. |
| Whether equitable subordination is warranted (Count V). | MERS/HSBC conduct after Fieldstone’s rejection was inequitable. | Statutory penalties, not disqualifications; no inequitable conduct proven. | Count V dismissed. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard requiring plausible entitlement to relief)
- Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for Rule 12(b)(6) complaints)
- Watterson v. Page, 987 F.2d 1 (1st Cir. 1993) (standard for ruling on 12(b)(6) motions in First Circuit)
- In re Soares, 107 F.3d 969 (1st Cir. 1997) (stay-violation voidness standard in automatic stay context)
- Dewsnup v. Timm, 502 U.S. 410 (U.S. 1992) (no lien stripping inChapter 7; value-based lien limits)
- U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (Mass. 2011) (foreclosure authority; mortgagee need not hold the note)