EMIGRANT MORTGAGE COMPANY, INC.; RETAINED REALTY, INC. v. DONEYN BOURKE; WILLIAM HAYWARD, SR.; ANY AND ALL OCCUPANTS
No. 24-1210
United States Court of Appeals For the First Circuit
January 29, 2025
Before Gelpí, Lynch, and Howard, Circuit Judges.
Todd S. Dion on brief for appellants.
Brian C. Linehan, Reneau J. Longoria, and Doonan, Graves & Longoria, LLC on brief for appellees.
LYNCH, Circuit Judge. Appellants Doneyn Bourke and William Hayward, Sr. in April 2009 defaulted on their $950,000 mortgage on a property in Nantucket, Massachusetts; the mortgage holder foreclosed; and Bourke and Hayward nonetheless refused to vacate the property. Emigrant Mortgage Company, Inc., the mortgage and note holder, and Retained Realty, Inc., the foreclosure sale purchaser, filed suit under
Bourke and Hayward‘s primary argument on appeal is that the Massachusetts statute governing the Land Court deprived the federal court of federal diversity jurisdiction and the ability to grant the relief sought. We write to make clear that these
I.
Because the district court granted summary judgment for appellees, we describe the facts giving rise to this lawsuit in a light as favorable to Bourke and Hayward as the record will reasonably allow. See Raheb v. Del. N. Cos., 120 F.4th 896, 897 (1st Cir. 2024). We first describe the state court litigation among the parties.
A. Massachusetts state court proceedings
On March 2, 2006, the Massachusetts Land Court issued a certificate of title (“COT“) to Bourke and Hayward for a parcel of registered land located at 6 Arkansas Avenue in Nantucket, Massachusetts (“the property“). On April 17, 2008, in connection with refinancing on the property, Bourke and Hayward took out a loan from Emigrant in the amount of $950,000 and granted Emigrant a mortgage on the property. On April 22, 2008, the Land Court registered this mortgage on Bourke and Hayward‘s COT.
Bourke and Hayward failed to make the April 1, 2009 loan payment and all subsequent loan payments to Emigrant. On March 21, 2011, Emigrant foreclosed in two different ways: it conducted a foreclosure sale of the property, see
On December 14, 2012, Emigrant recorded a certificate of entry (“COE“) with the Land Court, which stated that Emigrant‘s agent made “open, peaceable and unopposed entry” onto the property on March 21, 2011 “for the purpose . . . of foreclosing.” The certificate was signed by two witnesses and notarized.
On December 14, 2012, Emigrant registered a foreclosure deed with the Land Court, which granted the property to RRI for $799,937.66. The Land Court subsequently canceled Bourke and Hayward‘s COT and issued a transfer COT for the property to RRI. Neither Emigrant‘s mortgage nor its COE were noted on this transfer COT.
On March 25, 2013, RRI brought a summary process action against Bourke and Hayward in the Nantucket District Court seeking possession of the property. On November 28, 2017, after a twoday bench trial, the court entered a judgment of possession in favor of RRI.
However, the Massachusetts Appellate Division held that the foreclosure by power of sale failed due to the inadequacy of Emigrant‘s notice of default. See Retained Realty, Inc. v. Bourke, 2019 Mass. App. Div. 183, 2019 WL 7483578, at *2-3 (Dec. 23, 2019). More importantly, the court upheld, over Bourke and Hayward‘s objection, the Nantucket District Court‘s finding that Emigrant had made open and peaceable entry onto the property on March 21, 2011, and so had successfully foreclosed by this entry means. Id. at *3. The court noted that “[i]t is not unusual for a mortgagee to pursue different types of foreclosure concurrently.” Id.
Nonetheless, the summary process action was premature, given that Bourke and Hayward‘s three-year period of redemption had not expired. Id. at *4. RRI thus “lacked standing to obtain summary process against [Bourke and Hayward] at the time it filed th[e] action.” Id.
On January 7, 2020, after RRI‘s continuous legal possession and the expiration of the three-year period, the Nantucket District Court entered judgment in favor of Bourke and Hayward for possession of the
B. The federal district court decision
On July 9, 2021, appellees filed a complaint in the United States District Court for the District of Massachusetts under diversity jurisdiction seeking, inter alia, “[j]udgment for [p]ossession of the [p]roperty in favor of RRI” and “[j]udgment in favor of RRI for past due use and occupancy payments.” Bourke and Hayward moved to dismiss, challenging the exercise of federal diversity jurisdiction. The district court rejected the challenge, explaining that most of Bourke and Hayward‘s jurisdictional challenges “rest[ed] upon the mistaken premise that the statutory grant to the Land Court of exclusive jurisdiction over actions affecting title to registered land, such as the [p]roperty, precludes the maintenance of any such action in federal court.” Emigrant Mortg. Co. v. Bourke, 626 F. Supp. 3d 223, 228 (D. Mass. 2022).
On cross-motions, the district court granted summary judgment to appellees and denied Bourke and Hayward‘s motion and counterclaims. See Emigrant Mortg., 712 F. Supp. 3d at 169. It again rejected the jurisdictional challenge, holding that
On the merits, the court first held that the Massachusetts “Appellate Division‘s decision did not preclude renewal of RRI‘s claims in a subsequent action once standing had been obtained” and thus “res judicata d[id] not bar the Plaintiffs’ claims.” Id. at 176. As to Emigrant‘s foreclosure by way of entry and possession, the court held that Bourke and Hayward “ha[d] not raised a triable issue of fact regarding entry upon the [p]roperty by Emigrant” and “there [wa]s no dispute that [Bourke and Hayward] [ha]d not challenge[d] the foreclosure by entry within three years of the recording of the COE,” as they were required to do under Massachusetts law. Id. at 177-78. As to RRI‘s ownership, “[u]nder the doctrine of estoppel by deed, the Foreclosure Deed was sufficient to convey title to RRI upon the expiration of the statutory redemption period” on December 14, 2015. Id. at 179. “Therefore, RRI ha[d] made a showing that it [wa]s entitled to possession of the [p]roperty.” Id. at 179. The court found “that RRI [wa]s entitled to use and occupancy in the amount of $6,500 per month from March 21, 2011 to the date that [Bourke and Hayward] vacate the [p]roperty.” Id. at 180. Appellees state that as of the filing of their brief, this sum was $1,068,564.38, and that the fair market value of the property was $1,850,000 as of January 12, 2023. Both parties represented in their briefs that Bourke and Hayward continue to occupy the property.1
We review the district court‘s conclusion that it had subject matter jurisdiction over the complaint de novo. See Bower v. Egyptair Airlines Co., 731 F.3d 85, 90 (1st Cir. 2013).
We reject both of the arguments presented by Bourke and Hayward and affirm the district court‘s ruling. The Massachusetts Land Court statute does not divest the federal district court of diversity jurisdiction under
A.
Bourke and Hayward argue on appeal that the district court “usurp[ed] the exclusive jurisdiction of the Land Court,” citing
Under the U.S. Constitution, “[o]nly Congress may determine a lower federal court‘s subject-matter jurisdiction.” Kontrick v. Ryan, 540 U.S. 443, 452 (2004) (citing
“Jurisdiction is determined ‘by the law of the court‘s creation and cannot be defeated by the extraterritorial operation of a [state] statute . . . , even though it created the right of action.‘” Marshall v. Marshall, 547 U.S. 293, 314 (2006) (alteration in original) (quoting Tenn. Coal, Iron & R. Co. v. George, 233 U.S. 354, 360 (1914)); see also Larace v. Wells Fargo Bank, N.A., 972 F. Supp. 2d 147, 151 (D. Mass. 2013) (“[W]here the requisite diversity of citizenship and amount in controversy are present, a state statute cannot defeat federal jurisdiction.” (quoting Monogram Indus., Inc. v. Zellen, 467 F. Supp. 122, 123 (D. Mass. 1979))); 19 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 4501 (3d ed.) (explaining that, under the Erie Doctrine, a federal court sitting in diversity will follow state law “except when the matter before the court is governed by the United States Constitution, an Act of Congress,
This is a longstanding foundational principle. See Chi. & N.W.R. Co. v. Whitton, 80 U.S. 270, 286 (1871) (“Whenever a general rule as to property or personal rights, or injuries to either, is established by State legislation, its enforcement by a Federal court in a case between proper parties is a matter of course, and the jurisdiction of the court, in such case, is not subject to State limitation.“).
Bourke and Hayward next argue that appellees “effectively” asked the district court to “amend or alter the COT to RRI pursuant to G.L. c. 185, § 114,” “which is something only the Land Court can do.” See
This argument mischaracterizes the relief granted. Appellees sought a declaratory judgment declaring RRI the lawful owner of the property and a judgment in favor of RRI for possession of the property. The district court did not “amend” or “alter” RRI‘s December 14, 2012 COT to effectuate its judgment. To the contrary, Massachusetts law provides for registration of the federal court judgment concerning title to registered land by the Land Court. See
B.
Bourke and Hayward also make the futile argument that their 2021 Statement of Adverse Claim after appellees had successfully foreclosed by entry somehow created in the Land Court exclusive in rem jurisdiction over the property. This misreads both state and federal law.
The doctrine of prior exclusive jurisdiction holds that “[w]hen one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction
Massachusetts law provides that individuals who “claim[] any right or interest in registered land adverse to the registered owner . . . may . . . make a written statement setting forth fully his alleged right or interest.”
We rely on the district court‘s cogent and correct rulings as to all other preserved issues Bourke and Hayward have raised on appeal.
We affirm. Costs are awarded to appellees.