ORDER ON DEFENDANTS’ MOTIONS TO DISMISS THE COMPLAINT
Plaintiffs Kevin M. Wenzel and Melissa S. Wenzel (the “Wenzels”) filed this action challenging defendant Wells Fargo’s
The Wenzels originally filed this action in Massachusetts Superior Court and obtained a preliminary injunction prohibiting Wells Fargo from denying the Wenzels possession of the Property, from evicting the Wenzels from the Property, and from exercising any efforts designed toward gaining possession of the Property. Subsequent to removal to this Court, the Wenzels amended their complaint to, inter alia, bring claims against The Commerce Insurance Company (“Commerce”). All defendants have moved to dismiss the First Amended Complaint. For the following reasons, the Court grants the defendants’ motions and dismisses the First Amended Complaint.
I. PROCEDURAL BACKGROUND
A. Housing Court
After the Wenzels defaulted on their mortgage, Wells Fargo foreclosed on Sep
On January 6, 2011, Kevin Wenzel
On March 13, 2011, Kevin Wenzel filed a motion to extend the vacate date. (Housing Court Docket, Docket No. 54-1). On March 29, 2011, the Housing Court granted the motion to vacate the Property and extended the vacate date to June 30, 2011. (Id.). The March 29, 2011 order noted that Wells Fargo failed to appear at the hearing on the motion. (Docket No. 54-4).
On July 15, 2011, the Housing Court entered judgment in favor of Wells Fargo and against the Wenzels. (Docket No. 54-1). The Court issued an execution on the judgment on the same date. (Id.).
B. Superior Court
Prior to the issuance of the execution on the summary process action, on June 15, 2011, the Wenzels filed their original complaint in Massachusetts Superior Court. (State Court Record, Docket No. 13, at 2, 65-76). On July 18, 2011, the Wenzels filed a motion for a temporary restraining order, which was allowed the same day. (State Court Record at 2). On July 22, 2011, the Wenzels filed a motion for a preliminary injunction prohibiting Wells Fargo from evicting them from the Property. (State Court Record at 2, 46-47). Wells Fargo initially opposed the motion for a preliminary injunction but then withdrew its opposition. (State Court Record at 18-45). On July 27, 2011, the Superior Court issued a preliminary injunction enjoining Wells Fargo from:
1.) denying the Plaintiffs possession of 106 Surrey Road, Springfield, Massachusetts, 01118-1141 (the “premises”); and
2.) evicting the Plaintiffs from the premises or exercising any efforts designed toward gaining possession of the premises, including, but not limited to, enforcing, asserting, or relying upon any Executions On Judgment for Summary Process.
(the “Injunction”). (State Court Record at 16).
C. Federal Court
On August 22, 2011, Wells Fargo removed the action to this Court on the basis of diversity jurisdiction. (Docket No. 1). The parties consented to jurisdiction by a United States Magistrate Judge for all purposes on August 29, 2011. (Docket No. 9).
After the defendants moved to dismiss the action (Docket Nos. 10, 17), the Wenzels filed a First Amended Complaint on September 29, 2011. (Docket No. 26). While the original complaint named Option One Mortgage Corporation (“Option One”) and Sand Canyon Corporation (“Sand Canyon”) as defendants, the First Amended Complaint named Sand Canyon f/k/a Option One as a defendant. It also added factual allegations, amended the theories of liability against Wells Fargo and Sand Canyon, and added Commerce as a defendant. As a result of the filing of the First Amended Complaint, the defendants agreed that their original motions to dismiss were moot. (See Electronic Order dated October 3, 2011).
On September 30, 2011, Wells Fargo filed a motion to sever the claims against Commerce. (Docket No. 29). The Wenzels filed their opposition to the motion to sever on October 14, 2011. (Docket No. 39).
On October 13, 2011, Wells Fargo and Sand Canyon moved to dismiss the First Amended Complaint. (Docket Nos. 35, 37).
After the hearing on the motions, the Court allowed the parties the opportunity to submit supplemental briefings on several issues. (See Electronic Order dated November 2, 2011). The Wenzels filed a supplemental brief on November 17, 2011. (Docket No. 52). On November 23, 2011, Wells Fargo and Sand Canyon filed their responses to the Wenzels’ supplemental brief. (Docket Nos. 53 and 54).
On December 14, 2011, the Wenzels filed a Request for Judicial Notice, asking the Court to take judicial notice of certain documents in connection with the pending motions to dismiss. (Docket No. 63). At a hearing on December 15, 2011, the Court allowed the parties time to submit further briefing on the pending motions to dismiss, including the Wenzels’ request that the Court take judicial notice of certain documents. (See Electronic Clerk’s Notes dated December 15, 2011). On December 27, 2011, the Wenzels filed a supplemental brief. (Docket No. 68). On December 30, 2011, defendant Wells Fargo responded to the Wenzels’ supplemental brief and objected to the Wenzels’ request for judicial notice. (Docket Nos. 70-71).
D. Condemnation Proceedings
On June 1, 2011, the Property was severely damaged as a result of a tornado that swept through Springfield, Massachusetts. (See Order dated October 4, 2011, Docket No. 31, at 6). On July 7, 2011, the City of Springfield issued a condemnation order for the Property to the Wenzels. (Id.). On August 10, 2011, the City of Springfield issued a condemnation order and order to vacate to Wells Fargo as the
On December 6, 2011, Wells Fargo filed a second emergency motion to dissolve the Injunction. (Docket No. 56). Wells Fargo reported that on December 2, 2011, the City of Springfield filed a petition to enforce its condemnation order. (Id. at 2). The Court held a hearing on Wells Fargo’s second motion to dissolve the Injunction on December 15, 2011.
On December 15, 2011, the Housing Court held a hearing regarding the City of Springfield’s petition to enforce the condemnation order. The Housing Court ordered the Wenzels to vacate the Property by midnight on December 15, 2011; that Wells Fargo pay for hotel accommodations and provide a food stipend to the Wenzels; and set a further hearing for December 27, 2011. (Docket Nos. 65, 66). On December 27, 2011, the Housing Court continued its temporary order directing Wells Fargo to pay for alternative housing accommodations until the Housing Court makes a final decision regarding the application of Brown v. Guerrier,
II. FACTUAL BACKGROUND
A. The Allegations Against Wells Fargo And Sand Canyon
On May 31, 2005, the Wenzels obtained a loan from Option One and executed a mortgage on the Property in favor of Option One (the “Mortgage”). (First Amended Complaint (“Complaint”), ¶ 6).
Effective April 30, 2008, H & R Block, Inc., as the parent company of Option One, sold Option One’s mortgage loan servicing business to American Home Mortgage Servicing, Inc. (“AHMSI”). (Complaint, ¶ 7). Pursuant to the sale agreement, Option One changed its name to Sand Canyon. (Complaint, ¶ 7). AHMSI services mortgages for Wells Fargo and was and continues to be the mortgage servicer for the Property. (Complaint, ¶ 7).
As of April 30, 2008, Sand Canyon was no longer engaged in the servicing of residential mortgage loans and had no servicing rights. (Complaint, ¶ 9). As of April 30, 2008, Sand Canyon did not own any residential real estate mortgages. (Complaint, ¶ 10). Indeed, in a proceeding in the United States Bankruptcy Court for the Eastern District of Louisiana (In re Ron Wilson Sr. and LaRhonda Wilson, Case No. 07-11862), Dale M. Sugimoto, President of Sand Canyon, declared by affidavit dated March 18, 2009, that “Sand Canyon ... does not own any residential real estate mortgages,” and that “Sand Canyon’s present business involves dealing with litigation claims, including title issues or litigation relating to servicing prior to the sale of [Option One’s] servicing rights to [AHMSI].” (Complaint, ¶ 47).
On or about April 20, 2010, Sand Canyon executed an assignment of the Mortgage to Wells Fargo. (Complaint, ¶ 11; Assignment, attached as Ex. A to Wells Fargo Mem.).
B. The Allegations Against Commerce
Effective May 27, 2011, the Wenzels obtained a homeowner’s insurance policy from defendant Commerce. (Complaint, ¶ 20). The policy was in effect until May 27, 2012 and provided coverage for loss occasioned by wind and tornadoes. (Complaint, ¶ 20). On June 1, 2011, the Property was damaged by a tornado. (Complaint, ¶ 21). The Wenzels paid all premiums due under the policy and the policy was in effect at the time of the damage. (Complaint, ¶ 20).
On June 7, 2011, Commerce sent an adjuster to the Property who calculated a repair estimate of $38,810.88. (Complaint, ¶ 22). The Wenzels obtained an independent repair estimate of $149,500. (Complaint, ¶ 23).
Commerce’s adjuster attributed a structural lean on the Property to a pre-existing condition. (Complaint, ¶ 24). The Property was inspected by Commerce in 2005 and Commerce did not make any observations of structural leans at that time. (Complaint, ¶ 25).
On August 24, 2011, Commerce denied the Wenzels’ claim by offering only $5,000 to $7,000 for the Wenzels’ personal belongings. (Complaint, ¶ 65). The Wenzels assert that Commerce’s denial was based, in part, upon Wells Fargo’s analysis, upon the mistaken legal conclusion that the Injunction would be automatically dissolved upon removal of this case to federal court, upon the theory that the Wenzels did not hold title to the Property at the time of the loss, and upon the unsupported accusation that the Wenzels made intentional misrepresentations to Commerce. (Complaint, ¶¶ 66-68).
C. The First Amended Complaint
The First Amended Complaint contains seven counts. Count I seeks a declaratory judgment against Sand Canyon that the assignment of the Mortgage to Wells Fargo was invalid because Sand Canyon did not own the Mortgage and could not have assigned it to Wells Fargo. (Complaint, ¶¶ 26-28). Count II seeks a declaratory judgment that Wells Fargo did not have the authority to foreclose on the Property because it did not hold physical possession of the original promissory note associated with the Mortgage and did not comply with the statutory dictates of Massachusetts General Laws Chapters 244 and
III. ANALYSIS
A. Commerce’s Motion To Dismiss
Commerce moves to dismiss the claims against it under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Commerce argues that because it is a citizen of Massachusetts and the plaintiffs are also citizens of Massachusetts, complete diversity between the parties is lacking. (Commerce Mem. at 2-4).
1. Standard Of Review
Federal courts are courts of limited jurisdiction. Picciotto v. Continental Cas. Co.,
This case was removed to this Court on the basis of diversity jurisdiction.
A federal court has subject matter jurisdiction under 28 U.S.C. § 1332 only when complete diversity exists between the parties. 28 U.S.C. § 1332(a)(1); Casas Office Machs., Inc. v. Mita Copystar Am., Inc.,
Where, as here, a plaintiff introduces a non-diverse defendant to an action by amending the complaint under Rule 15(a), the new party destroys the federal court’s subject matter jurisdiction. Am. Fiber & Finishing, Inc. v. Tyco Healthcare Group, LP,
2. The Addition Of Commerce As A Defendant Defeated Federal Subject Matter Jurisdiction
There was complete diversity between the parties when the case was removed to this Court. The Wenzels are citizens of Massachusetts. (Complaint, ¶2). Defendant Wells Fargo is a citizen of South Dakota.
3. The Court Will Dismiss Commerce From The Action And Retain Jurisdiction Over The Remaining Defendants
The next question is whether Commerce may be dismissed from the action and the action proceed against the other defendants. That question is answered by determining whether Commerce is an in
Under Rule 21 of the Federal Rules of Civil Procedure, a non-diverse party that is not indispensable may be dismissed from the action so as to preserve diversity jurisdiction. Fed.R.Civ.P. 21;
Rule 19 contemplates a two-step inquiry. The first step is to determine whether a party is "necessary" to the action, in the sense that such party should be joined if feasible. Fed.R.Civ.P. 19(a); Pujol v. Shearson/American Express, Inc.,
(A) in that person’s absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may:
(i) as a practical matter impair or impede the person’s ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.
Fed.R.Civ.P. 19(a)(1).
“If the person is a ‘necessary’ party (ie., fits the definition of 19(a)), but joinder is not feasible, the court must take step two.” Pujol,
(1) the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or avoided by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person’s absence would be adequate; and
(4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.
Fed.R.Civ.P. 19(b).
The Court finds that Commerce is not a necessary or indispensable party in this action. The Court can afford complete relief as to the Wenzels, Wells Fargo and Sand Canyon in the absence of Commerce. This action arises out of Wells Fargo’s foreclosure on the Wenzels’ Property. The Wenzels allege that Wells Fargo had no authority to foreclose on the mortgage because the assignment of the mortgage from Sand Canyon to Wells Fargo was void. Accordingly, the Wenzels seek a declaratory judgment that they own the Property and also seek to quiet title pursuant to M.G.L. c. 240, § 6. The Wenzels also assert a claim of negligence against Wells
The Wenzels’ claims against Commerce, on the other hand, involve Commerce’s denial of a claim on the Wenzels’ homeowner’s insurance policy. (Complaint, ¶¶ 58-75). The Wenzels claim that the denial of their claim was in bad faith, causing Mr. Wenzel emotional distress. (Complaint, ¶¶ 76-77). Whether Commerce’s denial of the claim was in bad faith and/or caused the Wenzels emotional distress has absolutely no bearing on the Wenzels’ claims against Wells Fargo and Sand Canyon. Accordingly, Commerce’s presence is not necessary to afford complete relief among the Wenzels, Wells Fargo and Sand Canyon.
The only link between the claims is the Wenzels’ allegations that Commerce’s denial of the insurance claim was based primarily on the disputed title to the Property. (Docket No. 39 at 2). However, the determination of whether Commerce’s denial of the Wenzels’ claim was in bad faith does not necessarily depend on the resolution of this action. In addition, the Wenzels have not shown the possibility of harm to Commerce or the risk of multiple or inconsistent obligations. Accordingly, the Court finds that Commerce is not a necessary party. Because the Court finds that Commerce is not a necessary party under Rule 19(a), it need not determine whether it is an indispensable party under Rule 19(b). See Pujol,
The Wenzels argue that although the joinder of Commerce would appear to destroy diversity jurisdiction, Commerce could still be joined under the doctrine of supplemental jurisdiction. (Wenzel Opp. to Commerce Motion at 2—3).
Title 28, United States Code, Section 1367(a) grants supplemental jurisdiction over related claims in "any civil action of which the district courts have original jurisdiction." 28 U.S.C. § 1367(a). Section 1332, in turn, defines the requirements for "original jurisdiction" in diversity cases. 28 U.S.C. § 1332; see Picciotto,
The Court in Allapattah dubbed this view of complete diversity the ‘contamination theory’ because the inclusion of a nondiverse party ‘contaminates every other claim in the complaint, depriving the court of original jurisdiction over any of these claims.’ The ‘contamination theory’ makes sense in the context of the complete diversity requirement, the Court said, because ‘the presence of nondiverse parties on both sides of a lawsuit eliminates the justification for providing a federal forum.’ Additionally, the ‘contamination theory’ prevents*476 plaintiffs from creating diversity jurisdiction ‘simply by omitting [the nondiverse party] from the original complaint and then waiting for [that party] to be joined under Rule 19.’
Picciotto,
As explained above, the addition of Commerce destroyed complete diversity because Commerce, like the Wenzels, is a citizen of Massachusetts. Incomplete diversity destroyed the Court’s original jurisdiction over the entire action and so the Court could not exercise supplemental jurisdiction over the Wenzels’ claims against Commerce. However, Commerce is not an indispensable party to this action. Accordingly, the Court will dismiss Counts VI and VII from the First Amended Complaint and accordingly dismiss Commerce from the action, but will retain jurisdiction over the remaining claims.
B. Wells Fargo And Sand Canyon’s Motions To Dismiss
Wells Fargo and Sand Canyon have moved to dismiss all of the claims against them on various grounds. First, Sand Canyon and Wells Fargo argue that the Wenzels’ claims for declaratory judgment (Counts I and II) and to quiet title (Count III) are barred by the doctrine of res judicata. (Sand Canyon Mem. at 5;
For the following reasons, this Court grants Sand Canyon and Wells Fargo’s motions to dismiss. First, the Court finds that there is no actual controversy between the Wenzels and Sand Canyon regarding the assignment of the Mortgage and, indeed, the Wenzels have no standing to seek a declaration that the assignment was void. In addition, the Wenzels’ claims regarding the lawfulness of the mortgage foreclosure are barred by the doctrine of res judicata. To the extent that the Wenzels seek a declaratory judgment against Wells Fargo that Wells Fargo did not comply with the requirements of M.G.L. c. 186A, that statute does not apply to the Wenzels. Also, the claim of negligence fails as a matter of law because Wells Fargo does not owe a duty to the Wenzels and because the economic loss doctrine
1. Standard Of Review
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal,
In considering the merits of a motion to dismiss, the Court may look only to the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the complaint and matters of which judicial notice can be taken. Nollet v. Justices of the Trial Court of Mass.,
The Court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiffs’ favor. Langadinos v. American Airlines, Inc.,
2. The Wenzels’ Claim For Declaratory Judgment Against Sand Canyon Does Not Present An Actual Controversy Pursuant To The Declaratory Judgment Act And The Wenzels Have No Standing To Seek A Declaration That The Assignment Was Void
In Count I of the Complaint, the Wenzels seek a declaratory judgment against Sand Canyon that its assignment of the Mortgage to Wells Fargo was invalid. The Court finds that such a claim against Sand Canyon does not present an actual controversy, and indeed, the Wenzels lack standing to bring this claim. Accordingly, Count I must be dismissed.
A case or controversy must exist between the actual parties to a lawsuit for a federal court to have jurisdiction under Article III of the U.S. Constitution. Ferreira v. Dubois,
The Declaratory Judgment Act, 28 U.S.C. § 2201, allows a party to seek a declaration of his or her rights. Ferreira,
Declaratory judgments are thus limited to actual controversies as distinguished from disputes which are hypothetical, abstract or moot. Ferreira,
Here, there is no actual controversy as to Sand Canyon. Sand Canyon no longer holds the Mortgage. Sand Canyon did not foreclose on the Property and it does not assert any rights with respect to the Property or the Mortgage. The Wenzels were not parties to the mortgage assignment at issue here. A declaration against Sand Canyon (as opposed to Wells Fargo) that the assignment to Wells Fargo was invalid would have no practical effect upon the Wenzels. Accordingly, the Court finds that there is no actual controversy as between the Wenzels and Sand Canyon with respect to Count I of the Complaint.
In addition, “[standing is a threshold issue, determining whether the court has the power to hear the case, and whether the ... plaintiff is entitled to have the court decide the merits of the case.” Libertad v. Welch,
Here, the Wenzels have not established that they have a legally protected interest, as mortgagors, in the assignment of their Mortgage from Sand Canyon to Wells Fargo as they are not a party to the assignment nor are they granted any rights under it. In short, they are unrelated third parties with no interest in the assignment. See Peterson v. GMAC Mortg., LLC, No. 11-11115-RWZ,
Courts have repeatedly held that mortgagors have no standing to dispute a mortgage assignment to which they are not a party. See, e.g., Fryzel v. Mortg. Elec. Registration Sys., Inc., No. CA 10-352 M,
The Wenzels argue in response that all of the cases against their position involve an entity—MERS—that is not present in the instant case. (Docket No. 68 at 4). This argument is both factually and legally incorrect. First, some of the cases that have found that plaintiffs lack standing involve entities other than MERS. See, e.g., Juarez v. U.S. Bank Nat’l Ass’n, No. 11-10318-DJC,
Accordingly, the Court finds that the Wenzels have no standing to seek a declaration that the assignment was invalid and the Court dismisses Count I of the First Amended Complaint.
3. Principles Of Res Judicata Bar The Wenzels From Bringing Their Claims Challenging The Validity Of The Foreclosure
Wells Fargo argues that the Wenzels’ claims in Counts II and III are barred by the doctrine of res judicata. They argue that the determination of title was a key issue in the summary process action and having lost in that action, the Wenzels may not relitigate the claim now. This Court agrees.
A federal court sitting in diversity looks to state law in deciding the res judicata effect of a state court judgment. Andrew Robinson Int’l, Inc. v. Hartford Fire Ins. Co.,
There is no dispute that the first element, identity of the parties, is present here. The Wenzels and Wells Fargo are parties in this case and were parties to the summary process action. Although the Wenzels dispute the remaining two elements, the Court finds that those elements are also present.
First, the Court finds that there is an identity in the cause of action in both cases. "Massachusetts deems causes of action identical for claim preclusion purposes if they `grow out of the same transaction, act, or agreement, and seek redress for the same wrong.’" Andrew Robinson Int’l, Inc.,
“Challenging a plaintiffs entitlement to possession has long been considered a valid defense to a summary process action for eviction where the property was purchased at a foreclosure sale.” Bank of New York v. KC Bailey,
... a mortgagor owner, faced with eviction in a summary process action commenced following mortgage foreclosure, has the full opportunity needed to raise, as a defense in the summary process case, challenges to the mortgage foreclo*481 sure, and to the validity of the title which the foreclosure sale and deed yielded. Deferral of these questions, holding them in reserve for another day in another court, is not an acceptable tactic for the mortgagor to employ, at least without some clear understanding on the part of all the summary process parties that reserves until later the question of the title following the foreclosure. When the foreclosing lender comes into the Housing or District Court to recover possession, and bases its right on a title derived from a mortgage foreclosure recently conducted against the mortgagor, the mortgagor, who has knowledge of legal grounds why that foreclosure did not establish title in the grantee under the foreclosure deed, is bound to raise and pursue those legal grounds then, in the summary process forum. The failure to do so will preclude later litigation on these questions, which are fundamental elements of the case for possession [sic].
Solomont,
Accordingly, by entering a judgment for Wells Fargo in the summary process action, the Housing Court necessarily determined that Wells Fargo had properly foreclosed and was entitled to possession of the Property. Having had the opportunity to dispute the validity of Wells Fargo’s authority to foreclose in the summary process action, the Wenzels are now barred from relitigating those claims.
The Court also finds that there was a final judgment on the merits in the summary process action. The Wenzels argue that the summary process action did not result in a final judgment on the merits, as required for res judicata, because the summary process action was resolved by an Agreement for Judgment. (Wenzels’ Supp. Br. at 1-2).
An agreement for judgment “conclusively determines the rights of the parties as to all matters within its scope.” Kelton Corp. v. County of Worcester,
There is one wrinkle, however. The Agreement for Judgment contained a clause providing that “Defendants [the Wenzels] are free to file a separate Superi- or Court action to challenge the Foreclosure Sale, & in turn file any other neees
“A consent judgment is essentially a settlement agreement that is entered as a judgment.” Thibbitts v. Crowley,
We are aware of no sound theory upon which it can be held that the court has jurisdiction to modify the terms of a valid existing contract which arose solely through the voluntary act of the parties. And when ... the plaintiff made a free, calculated and deliberate choice to submit to an agreed upon decree rather than seek a more favorable litigated judgment, his burden under Rule 60(b) is perhaps even more formidable that had he litigated and lost. Altering the material terms of such an agreement at the behest of one party, without the consent of the other, does violence to the second party’s expectations and to the very concept of judgment by consent. ...
A court is powerless to enlarge or contract the dimensions of a true consent decree except upon (i) the parties’ further agreement or (ii) litigation of newly-emergent issues.
Thibbitts, 405 Mass, at 226-227,
The Wenzels also argue that the Agreement for Judgment cannot be enforced because Melissa Wenzel did not sign it. However, the Housing Court entered judgment against both Melissa and Kevin Wenzel on July 15, 2011.
The Wenzels argue that the summary process judgment should not have res judicata effect because declaratory judgments do not have preclusive effect and the judgment of possession entered in the sum
Finally, the Wenzels argue that the fact that they appeared pro se in the Housing Court matter entitles them to some measure of leniency in the application of res judicata principles. (Wenzel Opp. At 5). Again, the eases cited by the Wenzels do not support this proposition. The cases cited only hold that pro se filings may be read more liberally. They say nothing about the doctrine of res judicata with respect to pro se litigants. Indeed, the important principles regarding finality of judgments would be severely hampered if cases were subject to relitigation solely on the basis that one of the parties was pro se. Accordingly, this Court finds that principles of res judicata bar the Wenzels’ claims for declaratory judgment (Count II) and to quiet title (Count III) against Wells Fargo.
4. Count II Of The Complaint Also Fails As A Matter of Law On The Merits
The Wenzels claim for declaratory judgment against Wells Fargo appears to be based, in part, on its allegation that Wells Fargo did not comply with the statutory mandates of M.G.L. c. 186A (“Chapter 186A”) (Complaint, ¶ 35). Chapter 186A, however, provides for certain protections for tenants living in foreclosed properties. Section 2 of Chapter 186A provides that “a foreclosing owner shall not evict a tenant except for just cause or unless a binding purchase and sale agreement has been executed for a bona fide third party to purchase the housing accommodation from the foreclosing owner.” M.G.L. c. 186A, § 2 (emphasis added). The term “tenant” is defined as “a person or a group of persons
In addition, Section 3 provides that:
Within 30 days of foreclosure, the foreclosing owner shall post in a prominent location in the building in which the rental housing unit is located a written notice stating the names, addresses, telephone numbers and telephone contact information of the foreclosing owner, the building manager or other representative of the foreclosing owner responsible for the management of such building and stating the address to which rent and use and occupancy charges shall be sent.
M.G.L. c. 186A, § 3 (emphasis added).
To the extent that the Wenzels’ claims are based on Chapter 186A they fail as a matter of law because Chapter 186A does not apply to the Wenzels. The Wenzels have not alleged that the Property was a rental housing unit as required under Section 3. Moreover, Chapter 186A does not apply to the Wenzels because they were not tenants within the meaning of Chapter 186A. The Wenzels are the alleged owners and mortgagors of the Property. (Complaint, ¶ 6). Accordingly, to the extent that the Wenzels’ declaratory judgment count against Wells Fargo (Count II) is based on Chapter 186A, such claim must be dismissed.
Finally, the Amended Complaint alleges that Wells Fargo never held the Note in addition to the Mortgage at the time of the foreclosure sale and, as a result, had no legal authority to foreclose on the Property. (Complaint, ¶¶ 30-32). The theory upon which this allegation is based is incorrect as a matter of law. In Massachusetts, the foreclosing entity must hold the mortgage only, not both the mortgage and the note. McKenna v. Wells Fargo Bank, N.A., No. 10-10417-JLT,
5. The Wenzels Cannot Assert A Claim Of Negligence Against Wells Fargo
In Count V of the Complaint, the Wenzels allege that Wells Fargo is liable for common law negligence because it negligently continued the foreclosure process against the Wenzels without performing any due diligence regarding whether it had the authority to foreclose. The Wenzels’ negligence claim fails for two reasons.
First, Wells Fargo does not owe a duty of care to the Wenzels. To prevail on a claim of negligence, "a plaintiff must prove that the defendant owed the plaintiff a duty of reasonable care, that the defendant breached this duty, that
Second, even if a duty existed, the claim is barred by the economic loss doctrine. Massachusetts law provides that, in negligence actions, "purely economic losses are unrecoverable ... in the absence of personal injury or property damage." FMR Corp. v. Boston Edison Co.,
6. The Wenzels Have Failed To Allege Sufficient Facts To Support Their Claim for Fraudulent Misrepresentation
The Wenzels allege that Sand Canyon falsely represented to them and Wells Fargo that it had the authority to assign the Mortgage in order to divest the Wenzels of the Property. (Complaint, Count IV). Sand Canyon argues that the Wenzels allegations fail to state a claim for fraudulent misrepresentation and that the Wenzels have failed to plead fraud with particularity in violation of Rule 9. (Sand Canyon Mem. at 13-15). Sand Canyon is correct.
“To establish a claim of fraud under Massachusetts law, a plaintiff must prove that the defendant made a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that plaintiff reasonably relied upon the representation as true and acted upon it to his damage." Taylor v. Am. Chemistry Council,
Here, the Wenzels have not pled the circumstances surrounding the alleged misrepresentation with particularity.
IV. ORDER
For the foregoing reasons, the defendants’ motions to dismiss (Docket Nos. 35, 41, and 48) are GRANTED. Counts I, II, III, IV and V of the First Amended Complaint are dismissed with prejudice. Counts VI and VII of the First Amended Complaint are dismissed without prejudice. The Injunction is dissolved.
Notes
. Wells Fargo's full name as it appears in the Complaint is Wells Fargo Bank, National Association as Trustee for Securitized Asset-Backed Receivables LLC 2006-OP1 Mortgage Pass-Through Certificates, Series 2006-OP1.
. "Wells Fargo Mem. __,” refers to the October 13, 2011 Memorandum of Law in Support of Defendant, Wells Fargo Bank, National Association as Trustee for Securitized Asset-Backed Receivables LLC 2006-OP1 Mortgage Pass-Through Certificates, Series 2006-OPl’s Motion to Dismiss Plaintiffs’ Amended Complaint (Docket No. 36).
. Melissa Wenzel did not sign the Agreement for Judgment.
. Sand Canyon filed its motion to dismiss and accompanying memorandum on October 13, 2011. It inadvertently, however, filed the same papers it had filed back in September when it moved to dismiss the original complaint. On November 2, 2011, Sand Canyon filed a corrected motion to dismiss and memorandum of law. (Docket Nos. 48, 49).
. Because the Court is dismissing all of the Wenzels’ claims and dissolving the Injunction, that motion is now moot.
. Because this case is presently before the Court on a motion to dismiss, the Court sets forth the facts taking as true all well-pleaded allegations in the First Amended Complaint and drawing all reasonable inferences in the plaintiffs' favor. See Morales-Tañon v. Puerto Rico Electric Power Authority,
. In ruling on the motion to dismiss, the Court may consider the exhibits attached to Wells Fargo’s memorandum of law as well as
The Court, however, will not consider Exhibits A to C to the Wenzels' request for judicial notice. (Docket No. 63). Those documents are irrelevant to this case as they pertain to "robosigning.” The First Amended Complaint contains no allegations pertaining to "robo-signing.”
. "Commerce Mem._” refers to Defendant Commerce's Memorandum in Support of its Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) & (6) (Docket No. 42).
. As the Wenzels have brought only state law claims in this action, there is no basis for federal question jurisdiction. The Wenzels’ claims pursuant to the Declaratory Judgment Act, 22 U.S.C. § 2201, as contained in Counts I and II do not create an independent basis for subject matter jurisdiction. See Shelly Oil Co. v. Phillips Petroleum Co.,
. In the Notice of Removal, Wells Fargo avers that it is a "citizen of South Dakota having its main office, as designated in its articles of association, in Sioux Falls, South Dakota.” (Docket No. 1 at ¶ 5). In the First Amended Complaint, the Wenzels allege that Wells Fargo "is a securitized trust with an address of ... San Francisco, CA ... or Santa Ana, CA ...” (Complaint, ¶ 4). In any event, there is diversity between Wells Fargo and the Wenzels because the Wenzels are citizens of Massachusetts.
. Rule 21 states:
Misjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party.
Fed.R.Civ.P. 21.
. "Wenzel Opp. to Commerce Motion _" refers to the Opposition of Plaintiffs to Defendant Commerce's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) & (6) (Docket No. 47).
. Because the Court is dismissing Commerce from this action, Wells Fargo’s motion to sever the claims against Commerce (Docket No. 29) is moot.
. "Sand Canyon Mem. _” refers to the Memorandum in Support of Motion to Dismiss Amended Complaint of Defendant Sand Canyon Corporation, f/k/& Option One Mortgage Corporation (Docket No. 49).
.Sand Canyon’s memorandum of law incorporates by reference portions of its memorandum in support of its motion to dismiss the original complaint.
. The Court finds that the question of whether the Wenzels have standing to challenge the assignment is different from the question of whether they have standing to challenge the foreclosure on the basis that Wells Fargo did not properly hold the mortgage at the time of the foreclosure. The Massachusetts Supreme Judicial Court ("SJC") recently held that in order to properly foreclose under Massachusetts law, the foreclosing party must properly own the mortgage at issue. U.S. Bank Nat’l Ass’n v. Ibanez,
In any event, the Court decides that it need not reach this issue because it finds that the Wenzels’ claims against Wells Fargo regarding the validity of the foreclosure are barred by the doctrine of res judicata. Although a federal court must ordinarily decide the jurisdictional issues first, if good reasons counsel otherwise, the court may proceed directly to the 12(b)(6) motion. Kelly v. Deutsche Bank Nat’l Trust Co.,
. The Wenzels argue that the Court cannot rely on Bank of New York v. Bailey,
. Although the Court is not bound by a decision of the Massachusetts Land Court on Massachusetts state law, the court finds the reasoning of the Land Court in this case persuasive.
. The Wenzels argue that the judgment in the Housing Court cannot operate as res judicata because the Housing Court does not have jurisdiction to quiet title. (Docket No. 68 at 2-3). The Wenzels point to a December 19, 2011 letter from Hon. Dina E. Fein, First Justice of the Housing Court Department of the Trial Court, to Hon. Steven D. Pierce, Chief Justice of the Housing Court Department. (Docket No. 68-1). First, the Court questions whether it may consider that letter in ruling on the motions to dismiss. In any event, that letter is of dubious application to this case as it involves a completely unrelated Housing Court matter.
.“Wenzel Supp. Br__” refers to the Plaintiffs’ Supplemental Post-Hearing Brief in Opposition to Motions to Dismiss by Defendants, Wells Fargo and Sand Canyon (Docket No. 52).
. For that reason, the Wenzels’ argument that the Agreement for Judgment was not expressly approved by the Housing Court is also unavailing. (Wenzel Supp. Br. at 1-2).
. The doctrine of res judicata also provides a reason to dismiss the declaratory judgment claim against Sand Canyon. A prior judgment is conclusive against the party to the action in which it was rendered or the party’s privy. Rhode Island Hosp. Trust Nat’l Bank v. The Ohio Cas. Ins. Co.,
The Court finds that Sand Canyon is in privity with Wells Fargo for purposes of res judicata. Option One originated the loan that is the subject of the Complaint and, after changing its name to Sand Canyon, assigned it to Wells Fargo. Accordingly, res judicata principles also bar the declaratory judgment claim against Sand Canyon.
. The Wenzels have offered no serious opposition to this argument.
. The Wenzels argue that this count survives simply because they used the term "negligence” in the complaint. (Wenzel Opp. at 8-9). This argument runs afoul of Iqbal’s and Twombly’s requirements. Iqbal,
. The Court recognizes that Massachusetts law provides for a tort of "wrongful foreclosure." See Levin v. Reliance Co-Operative Bank,
. Plaintiffs state that "[t]his count pleads fraud with particularity as required by Fed. R.Civ.P. 9.” (Complaint, ¶ 51). However, this statement alone is plainly insufficient in light of Twombly and Iqbal.