EMIGRANT RESIDENTIAL LLC, Plаintiff, Appellee, v. LINDA S. PINTI and LESLEY R. PHILLIPS, Defendants, Appellants.
No. 21-1330
United States Court of Appeals For the First Circuit
June 17, 2022
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Denise J. Casper, U.S. District Judge]
Before Thompson, Selya, and Kayatta, Circuit Judges.
Eric E. Renner, with whom Renner Law, LLC was on brief, for appellants.
Grace C. Ross and Sarah McKee on brief pro se, amici curiae.
Brian C. Linehan, with whom Reneau J. Longoria and Doonan, Graves & Longoria, LLC were on brief, for appellee.
SELYA, Circuit Judge.
I
While this appeal chiefly concerns
In 1982, Lesley R. Phillips purchased a residential condominium unit (the Property) in a building located at 1643 Cambridge Street, Cambridge, Massachusetts. See Pinti I, 33 N.E.3d at 1214-15. Since 1987, Phillips‘s spouse, Linda S. Pinti, has lived there with her. Shortly after the couple married in 2005, Pinti‘s name was added to the dеed. See id. at 1215.
On March 13, 2008, Pinti and Phillips (collectively, the Homeowners) refinanced an existing home equity loan. They executed and delivered a promissory note (the Note) in the face amount of $160,000 to Emigrant Mortgage Company, Inc. (EMC), a subsidiary of Emigrant Bank.1 See Pinti III, 2021 WL 1131812, at *1. The Note was secured by a duly recorded mortgage on the Property (the Mortgage), granted to EMC by the Homeowners. See id. Phillips—though a signatory to the Note and the mortgage agreement—was specifically excepted from personal liability on the Note.
As time went by, the Homeowners fell behind on their mortgage payments. See Pinti I, 33 N.E.3d at 1215. On September
Around the same time that EMC‘s minuet with the Homeowners was beginning, the Emigrant Bank entities were shuffling around the documents that held the key to their rights under the Mortgage. See Pinti II Ruling at 12-14. On November 30, 2009, EMC executed an assignment of the Mortgage to ESB-MH Holdings, LLC (ESB-MH), another Emigrant Bank subsidiary. See id. That assignment was not recorded. On the same date, EMC also exeсuted an allonge to the Note, making the Note payable to ESB-MH. See id. Although neither the Mortgage nor the Note were physically delivered to ESB-MH, both EMC and ESB-MH regarded ESB-MH as the owner/holder of the Mortgage and the Note. See id. at 15-17.
The picture soon grew more complicated. With a financial crisis rocking the nation in the 2008-2009 time frame, the possibility arose that Emigrant Bank would need to use portions of its mortgage portfolio to secure credit from the Federal Home Loan Bank of New York (FHLBNY), a wholesale mortgage lender that offers credit to other banks. To assure that this could be done with celerity, ESB-MH executed a second assignment of the Mortgage and the Note to FHLBNY on November 30, 2009. See id. at 16-17. This assignment was not recorded and—for aught that appears—neither it, the mortgage documents, nor the Note were delivered to FHLBNY. See id.
On September 22, 2010, Pinti filed for Chapter 7 bankruptcy. See Pinti III, 2021 WL 1131812, at *2;
In August of 2011, Pinti sent a qualified written request to EMC asking it to identify the holder оf the Mortgage and the owner of the Note. See Pinti I, 33 N.E.3d at 1216; see also
Over the course of three consecutive Tuesdays in June of 2012, EMC published notice of the foreclosure sale in the Boston Herald. See id. It proceedеd to hold the foreclosure sale on August 9, 2012. An unrelated party—Harold Wilion—purchased the Property at the foreclosure sale for $260,000. See Pinti III, 2021 WL 1131812, at *2. EMC gave Wilion a foreclosure
After EMC received payment from Wilion, an employee of EMC prepared a discharge of the Mortgage and sent it to the Homeowners. See id. The parties dispute whether EMC had established procedures for this process and whether the employee(s) who prepared and sent the discharge were abiding by such procedures. At any rate, EMC did not return the Note to the Homeowners nor did it give them any other indication that the loan had been repaid in full. See id.
In October of 2012, Wilion filed a summary process action in a state district court, seeking to evict the Homeowners. See Pinti I, 33 N.E.3d at 1216. The Homeowners defended that action. And mindful that the best defense is sometimes a good offense, they also sued Wilion and EMC in the state superior court on January 31, 2013, seeking to declare the foreclosure void. See id. Their suit was premised on a golconda of theories, including a claim that the notice of default sent to them did not comply with the requirements specified in the mortgage documents. See id. EMC moved to dismiss and Wilion moved for summary judgment. See id. at 1216-17. The superior court granted both motions. See id. at 1217.
The Homeowners appealed. See id. The Massachusetts Supreme Judicial Court (SJC) assumed jurisdiction over the appeal. See id.;
The SJC handed down its ukase on July 17, 2015. See id. at 1213. On July 29, the Homeowners recorded the mortgage discharge previously forwarded to them by EMC. See Pinti III, 2021 WL 1131812, at *3. An Emigrant Bank entity thereafter returned the purchase money to Wilion, who surrendered his claim to the Property. See id.
That was not the end of the matter. EMC decided to try its luck in a different venue and, on June 17, 2016, filed suit against the Homeowners in the United States District Court for the District of Massachusetts. See id. It sought, among other things, an order striking the recorded mortgage discharge and a deсlaration that EMC was the lawful owner of the Property through foreclosure by entry. See id.; see also Complaint, Pinti II, No. 16-11136, ECF No. 1 (D. Mass. June 17, 2016). One of EMC‘s core contentions was that the discharge was mistakenly prepared and erroneously delivered.
Following some preliminary motion practice, the parties conducted discovery addressed both to EMC‘s standing to pursue its claims and to the merits. In the process, the Homeowners were afforded a full and fair opportunity to pursue discovery on the provenance of the mortgage discharge and EMC‘s right to conduct a foreclosure by entry.
After granting in part and denying in part summary judgment because issues of fact remained as to both standing and the merits, the district court convened a bench trial. The court bifurcated the trial, though, electing to address first the issues related to standing. Finding that EMC was no longer the holder of the Note and, thus, that it lacked standing to sue, the court dismissed the action without prejudice. See Pinti II Ruling at 17. The court confirmed that the Homeowners had not been allowed to cоnduct discovery with respect to the physical Note (which was, and remains, in the custody of the district court). See id. at 21-22.
Approximately three weeks later, Emigrant Residential sued the Homeowners in the United States District Court for the District of Massachusetts. See Pinti III, 2021 WL 1131812, at *4. It invoked the court‘s diversity jurisdiction, see
In due course, the Homeowners filed an answer and a slew of counterclaims. Emigrant Residential replied to the counterclaims and, on June 9, 2020, the parties filed their joint case-management statement. See
On June 17, Emigrant Residential moved for summary judgment. The next day, the district court held a scheduling conference. Following that conference, the court stated that it was “aware of the unique posture of the case,” set a briefing schedule for the summary judgment motion, and stayed “[a]ny discovery” pending the resolution of that motion.
Before their opposition to the summary judgment motion was due, the Homeowners filed a motion under
Without explanation, the district court summarily denied the
In this court, the Homeowners make two principal arguments. First, they argue that the district court abused its discretion in denying their
We review the disposition of a
We pause at this juncture to iron out a wrinkle regarding our precedents in this area. Prior to 2010, what is now
if a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present faсts essential to justify its opposition, the court may: (1) defer considering the motion [for summary judgment] or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order.
In the mine-run of cases, the crucial inquiry under
a timely statement—if not by affidavit, then in some other authoritative manner—that (i) explains his or her current inability to adduce the facts essential to filing an opposition, (ii) provides a plausible basis for believing that the sought-after facts can be assembled within a reasonable time, and (iii) indicates how those facts would influence the outcome of the pending summary judgment motion.
Vélez v. Awning Windows, Inc., 375 F.3d 35, 40 (1st Cir. 2004). We have characterized this showing as encompassing five elements: “authoritativeness, timeliness, good cause, utility, and materiality.” N. Bridge Assocs., 22 F.3d at 1203.
This taxonоmy is “not inflexible,” and we afford district courts “considerable discretion” with respect to the interplay of these five elements. See Id. Depending on the circumstances, “one or more” of them “may be relaxed, or even excused, to address the exigencies of a particular case.” Id. Conversely, a short fall in any one of them may—again, depending on the circumstances—suffice to scuttle a
The affidavit submitted with the Homeowners’
- Discovery about the provenance of the ostensibly mistaken mortgage discharge and how the Emigrant Bank entities reacted to it.
- Discovery about the EMC employee who prepared and transmitted the mortgage discharge.
- Discovery about the relationships among EMC, ESB-MH, and Emigrant Residential, including discovery about the scope of EMC‘s powers under its “subservicing relationship” with Emigrant Residential.
- Discovery about the authenticity of the Note, including examination by a “Paper Scientist and Forensic dоcument expert.”
- Discovery about whether Emigrant Residential or any other Emigrant Bank entity charged off the value of the Note for tax purposes.
- Discovery about whether and, if so, at what points, FHLBNY owned the Mortgage, including discovery about the 2019 assignments.4
In resisting this motion, Emigrant Residential argues in this court, as it argued below, that the Homeowners failed to show good cause for not having obtained any relevant discovery in prior proceedings. Emigrant Residential says that the Homeowners had a full and fair opportunity to secure the requested materials in earlier cases. In addition, Emigrant Residential insists that additional discovery would be futile.
We start with the question of whether the Homeowners had a full and fair opportunity to conduct discovery in earlier cases. Emigrant Residential argues that the factual development of the issues in Pinti I and the extensive discovery in Pinti II, coupled with the substantial overlap in the issues and parties, undermines any claim that the Homeowners’
The absence of good cause ordinarily will be reason enough to deny
That view is enlightening here. When a party has had a full and fair opportunity to obtain relevant facts earlier in a case and has forgone that opportunity, there will seldom be good cause to grant the party‘s request for additional discоvery through the medium of
Given this close similarity of parties and issues, we think that it was within the district court‘s discretion to look to the circumstances of Pinti II in determining whether the Homeowners had a full and fair opportunity to gather the requested discovery before they made their
For one thing, the incentives were the same in both cases. For another thing, discovery was generally available in Pinti II (with exceptions that we will discuss infra). Last—but far from least—the parties undertook discovery in Pinti II, culminating in their joint assurance to the Pinti II court that all necessary discovery had been completed and that they were ready to proceed to trial.
Against this backdrop, we conclude that—for the most part—the Homeowners had a full and fair opportunity in Pinti II to conduct the discovery requested here. To that extent, then, they have failed to show good cause to support their
We say “for the most part” because there are two areas of discovery that stand separate and apart. The first area involves the authenticity of the Note and its chain of custody. In Pinti II, the Homeowners had proposed the engagement of a document examiner as an expert and sought discovery on this complex of issues. The Pinti II court denied their request. When the court later dismissed the case on standing grounds, it acknowledged that the Homeowners had not been afforded any opportunity to conduct discovery on this complex of issues. See Pinti II Ruling at 21-22.
We summarize succinctly. Given the circumstances described above and given the immediate stay of discovery ordered by the district court in this case, the Homeowners have shown good cause to undertake additional discovery in the two areas that we have identified.6
Let us be perfectly clear. Speculation that a note might not be authentic and that assignments might havе been mishandled does not necessarily justify—in a garden-variety foreclosure case—a need for further discovery of the volume and type generated by this litigation. Here, however, we have a rather unusual record, showing significant and repeated missteps by the Emigrant entities in their handling of pertinent documents. It is just such a record that makes further narrowly targeted inquiry “proportional to the needs of the case.”
Even so, this warranted discovery does not open the floodgates for cascading discovery of every type and kind. The Homeowners simply have not shown good cause to conduct additional discovery in any other areas. That failure is sufficient to ground the district court‘s denial of additional discovery in all such areas.
Emigrant Residential has a second blade in its scabbard. It says that additional discovery in these unexplored areas would be futile (or put another way, that the Homeowners’ discovery requests lack utility). In support, it points to the district court‘s rescript, which suggests that such discovery would have been fruitless because “a mortgagor does not have standing to challenge shortcomings in an assignment that render it merely voidable at the election of one party but otherwise effective to pass legal title.” Pinti III, 2021 WL 1131812, at *5 (quoting Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291 (1st Cir. 2013)).
That is true as far as it goes—but it does not take Emigrant Residential very far. Additional discovery may reveal defects that call into question the chain of custody of the Note or its authenticity. So, too, additional discovery may reveal circumstances rendering the 2019 assignmеnts void (not merely voidable). And it is common ground that “a mortgagor has standing to challenge a mortgage assignment as invalid, ineffective, or void (if, say, the assignor had nothing to assign or had no authority to make an assignment to a particular assignee).” Culhane, 708 F.3d at 291. Given these possibilities, Emigrant Residential‘s futility argument is itself futile.
We do not gainsay that a district court has wide discretion both in the adjudication of
The proper office of
III
We need go no further. For the reasons elucidated above, we vacate the order granting summary judgment, affirm in part and reverse in part the order denying the Homeowners’
So Ordered.