Guest Blog Post: 2017 Eviction Appeal Recap

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The Massachusetts Landlord Tenant Blog is pleased to have Attorney Joseph N. Schneiderman guest blog on 2017’s major eviction appeal decisions .  Attorney  Schneiderman is an appellate attorney licensed in Massachusetts and Connecticut and may be contacted at connlawjoe@gmail.com.

The year 2017 was a busy time in the realm of the law of summary process. Beyond the expansion of the Housing Court, the Supreme Judicial Court and the Appeals Court have heard and issued significant eviction appeal decisions that landlord-tenant and Housing Court practitioners should be familiar with.

Summary Process and Harassment Prevention Orders

First, in C.E.R. v. P.C., 91 Mass. App. Ct. 124 (2017), the Appeals Court emphatically held that harassment prevention orders under G.L. c.258E could not become functional shortcuts or substitutes for summary process. The facts do not flatter the defendants; they were two roommates renting a room from the plaintiff, who was about to sell the home.  Suffice it to say that the roommates engaged in boorish conduct involving sex, drugs, and rock and roll. The situation eventually boiled over to the point of the plaintiff obtaining an ex parte harassment prevention order in the Ipswich District Court. The judge later extended it for one year, effectively forcing the defendants to leave the home.

Although the Appeals Court vacated the orders for insufficient evidence of harassment, the Appeals Court also emphasized that such orders could not be “used as a short-cut for evicted tenants without following summary process procedures.” 91 Mass. App. Ct. at 132. More particularly, the plaintiff repeatedly asserted that she wanted the orders to “induce the defendants to leave without interfering with the rental or sale of the property.”  The police who responded in turn suggested she obtain a lawyer and during the proceedings,  “the defendants had already begun to move out.” The trial judge also hinted that the plaintiff was attempting to avoid summary process-echoing a similar past case.

Practitioners and judges alike should also be aware of how landlords may attempt to employ harassment prevention orders as functional summary process substitutes. Tenant bad behavior should not be condoned. But summary process is the means to redress it-not Chapter 258E. If you have questions, check the dockets in the District Court as defendants have a right to obtain the orders, even though portions of the orders are confidential. G.L. c.258E, §10. If there’s pushback from a Clerk, move for relief from impoundment.

Moreover, evidence that there was no reasonable basis for a harassment prevention order may defeat an Anti-SLAPP (Strategic Litigation Against Public Participation, think a Donald Trump suing a little guy just for the sake of suing him) motion. Compare Van Liew v. Stansfeld, 474 Mass. 31 (2016), citing G.L. c.231, §59H. Even with changes in Anti-SLAPP this year, an unjustified harassment prevention order or Anti-SLAPP order may constitute retaliatory conduct to trigger treble damages under c.186, §14. But those questions are for another day. For now, be mindful of this possibility.

Termination of a Section 8 Lease, Right to a Jury Trial in an Eviction Case

In CMJ Management v. Wilkerson, 91 Mass. App. Ct. 276 (2017), the Appeals Court held that a tenant’s child’s criminal conduct justified termination of a Section 8 lease-but that the same tenant had been unlawfully deprived of her right to a jury trial. The tenant had custody of her fourteen year old grandson, who shot and fired a BB gun that injured two fellow juveniles.  Although no delinquency charges followed, the eviction occurred.

The Appeals Court rejected the tenant’s argument that the juvenile’s conduct did not constitute criminal activity. Admittedly, the juvenile’s conduct violated a statute that only provided for a fine.  However, the lease unambiguously forbade criminal activity by any tenant, member of a tenant’s household and threatened the well being of fellow tenants.  There was no distinction between juveniles and adults in the lease. Thus, termination was proper.

Although the Appeals Court’s analysis is literally correct, Massachusetts law has always treated juveniles charged with crime  as different in kind from adult offenders. Indeed, “as far as practicable [juveniles charged with crimes ] shall be treated, not as criminals, but as children in need of aid, encouragement and guidance.” G.L. c.119, §53.

Practically speaking, Juvenile Court judges have broad flexibility to deal with juveniles facing delinquency charges to further their best interests. The question for more than 100 years has always been: “What shall be done with this child?” not, how do we punish and deter this child?   Indeed, not only was there was no guarantee that a complaint would issue against a juvenile, but if a complaint had issued, the judge could have dismissed the complaint before arraignment-which would mean that no CARI record would exist Compare Commonwealth v. Humberto H.,  a juvenile, 466 Mass. 562 (2013).

To be certain, summary process and delinquency are different proceedings in kind. However, to deprive a juvenile of his housing, housing he very likely has no control over and must rely on an adult to obtain, is a sufficiently adverse collateral consequence that the consequence effectively defies the command not to treat him as a criminal. This is curiously absent from the Appeals Court’s analysis. This issue also underpinned an ultimately unsuccessful application for further appellate review by the Supreme Judicial Court. See Docket No. FAR-25267.

Practitioners who have clients with family members facing delinquency complaints should keep abreast of this issue. This collateral consequence is substantial and potentially irrationally  treats the juvenile as a criminal. Whether or not Section 8 pre-empts G.L. c.119, §53 (or conversely, that applying Section 8 to a child within the ambit of G.L. c.119, §53 violates the 10th Amendment as unconstitutional strongarming) is a thorny and novel issue-for another day. Compare Boston Housing Authority v. Garcia, 449 Mass. 727 (2007).

On the jury trial issue, the Appeals Court held that the judge’s action striking the tenant’s jury claim amounted to disproportionate sanction. The tenant answered by asserting a jury claim but did not file a pre-trial memorandum to press her claim although the Landlord had-and indeed, the Landlord proposed instructions. The tenant  admitted that she did not understand the pre-trial memorandum. The judge replied, “I can’t let you go forward …without a pre-trial memorandum.” 91 Mass. App. Ct. at 281-282.

The Appeals Court held that the tenant’s answer sufficed to timely demand and assert her jury claim. Two factors mitigated against implying that the tenant waived the jury trial. First, Housing Court Standing Order No. 1-04 specifically imbued judges with power to allow tardy motions and other pleadings since many parties were self-represented. Second, Art. 15 of the Massachusetts Declaration of Rights specifically guaranteed a right to a jury trial in eviction trials. 91 Mass. App. Ct. at 284-285, citing New Bedford Housing Authority v. Olan, 435 Mass. 364, 370 (2001).

A judge should therefore approach striking a jury demand cautiously. Although the tenant had notice of the possibility of striking the demand as a  sanction, the judge abused her discretion by striking the demand. Indeed, the tenant attempted to understand the memorandum and striking the demand would not serve as a deterrent sanction.

What’s the take-away? If you represent someone who was self-represented, avail yourself not only of Standing Order 1-04-and Mass. R. Civ. Pro. 15 (to amend or conform pleadings.) Indeed, Rule 15 favors granting amendments-there needs to be prejudice to overcome that presumption. Dockets and court files can be messy-indeed, self-represented litigants may try to litigate by paper deluge. These rules are a powerful solvent for counsel to clean them up. If there’s a question about a jury trial, make sure it’s in the answer-and emphasize that striking a jury demand should be a last resort because of the constitutional and statutory implications. And, cite this case!

Waiver of a Jury Trial in an Eviction Case

Cort v. Majors, 92 Mass. App. Ct. 151 (2017) followed Wilkerson.  The case was a typical summary process case; tenant and landlord were self-represented, tenant stopped paying rent, landlord sought eviction, tenant counterclaimed.  After the landlord’s testimony and during his own testimony, the tenant said, “I’d like a jury.” The judge responded that the tenant waived that right, to the tenant’s surprise. “You didn’t tell me that.” 92 Mass. App. Ct. at 152. The trial concluded in the landlord’s favor.  The question on appeal was whether the tenant had indeed waived his jury trial.

The Appeals Court held that he had not. The Appeals Court recalled that generally, Housing Court trials were bench trials unless constitutionally required. Article 15 of the Massachusetts Declaration of Rights guaranteed a jury trial, Mass. R. Civ. Pro. 38(a) incorporated and implemented that right, and Uniform Summary Process Rule 8 implemented that right in summary process trials. Mass. R. Civ. Pro. 39 in turn only provided for a waiver of a jury trial if there was a written or oral stipulation. Because the tenant demanded a jury trial in his answer, the issue was whether the tenant executed a valid oral stipulation.

The Appeals Court held he had not. Although the tenant answered ready for trial, this response to the judge was not a waiver of his right to a jury trial.  Nor was there any suggestion that the tenant authorized the judge “to decide or knowingly relinquished his right to a jury trial.” Rather, under Rules 38 and 39, if there is a valid jury demand, a judge had a duty to “affirmatively inquire of the parties, before any witness is sworn, whether the case will proceed with or without a jury [this was not…] satisfied by commencing a bench trial and awaiting an objection by a party.”  The Appeals Court recognized that many self-represented litigants appeared in the Housing Court. However, Rules 38 and 39 meant what they said-and a judge could still explain the differences to a party.

The two cases above represent robust reinforcement of the rights to a jury trial. The Appeals Court recognize the competing demands on Housing Court judges to, on the one hand, maintain efficient proceedings but also respect the rights of tenants-who are often self-represented and ill-suited to understand assert them. Only the clearest and most unequivocal conduct will amount to a waiver of the jury trial right. Like in the criminal context, judges must engage with tenants to ensure that they are knowingly and clearly and unambiguously waiving their jury trial rights. The Appeals Court also recognizes that Housing Court judges can carry out this duty easily by discussing and informing tenants of this right.

Damages in an Eviction Case

South Boston Elderly Residences v. Moynahan, 91 Mass. App. Ct. 455 (2017) further elucidates damages in the landlord-tenant context. Moynahan lived in a small (450 square feet) unit that suffered from perpetual moisture and mold problems. Conditions eventually deteriorated to the point of mushrooms growing in the carpeting-the landlord refused to address in light of clutter.

Boston Inspectional Services eventually cited the landlord-who in turn served a notice to quit in October 2011 and refused to cash rent checks. Moynahan returned to the apartment but discovered inadequate ventilation-and a second and third summary process action followed. A three day trial ensued-and the trial judge refused to award any rent abatement damages for moisture or mold before August 2011 or for fall of that year because Moynahan prevented repairs. The judge also found that Moynahan rebutted the presumption of in retaliation due to clutter and sustained non-payment of rent.

Although the Appeals Court sympathized with Moynahan’s plight, ultimately, the code violation relative to moisture and mold were minor and did not cause problems until May 2012. Thus, the findings of fact were not clearly erroneous to warrant damages. 91 Mass. App. Ct. at 462-464.  Moreover, since Moynahan prevented access for repairs and had access to another nearby apartment, he only established lack of access to an adequate unit for three months of five –and the judge did not err in only awarding him one month.

Regarding ventilation damages, the judge erred in so far as he based an abatement award to Moynahan as a proverbial eggshell plaintiff, or easily subject to injury due to the lack of ventilation and lack of access to windows. Rather, since a breach of warranty of habitability supported contract and tort damages, the landlord had to take Moynahan as he found him. Since the judge applied an incorrect legal standard while partially crediting Moynahan’s testimony about breathing conditions, the Appeals Court remanded. 91 Mass. App. Ct. at 465-467.

The Appeals Court however found that the judge’s finding that the landlord overcame the presumption of retaliation by clear and convincing was clearly erroneous. Although the landlord complained about the issue in March 2010, there was no evidence that Moynahan was hoarding or making it worse before the notice to quite in October 2011. Nor did the landlord act to correct it until after Moynahan called in inspectional services. Thus, Moynahan deserved statutory damages of up to three months rent or actual damages.

However, Moynahan had not established damages for c.93A. To be certain, the code violation, in and of itself, violated c.93A. But the landlord had acted to cure the violation and since Moynahan had not presented any evidence of a violation before August 2011, Moynahan had no right to 93A damages. Finally, with regards to quiet enjoyment, although unauthorized entry could amount to a breach of quiet enjoyment, the record simply did not bear it out as unreasonable-there was only incident where Moynahan did not desire the landlord’s entry but sought it for another day-which was to address repairs.

There are many possible takeaways from this case. First, a breach of the warranty of habitability should not simply be based on market or contractual damages-it should stem from actual damages a tenant suffers. Moreover, controverting retaliation cannot occur in a vacuum. The landlord must put forth real and specific evidence that the eviction was completely independent of the complaints about conditions. This dovetails with the heightened burden of proof.

This case though stands in marked contrast to the Leisure Woods case holding that c.93A damages are available for per se violations of the regulations governing manufactured housing. Although regulatory violations do constitute c.93A violations, the tenant still has to prove that the violation is continuing-which the landlord can mitigate. Like Leisure Woods however, this case creates the potential for mischief: viz. a lack of incentive for landlords to cure damages by undervaluing damages. Hopefully, the Supreme Judicial Court or the Legislature will cure or clarify this confusion.

Lurking in the background of this case are questions of hoarding.  This case does not squarely present or involve the question of how a landlord’s response to hoarding may or may not mitigate tenant damages. The factual record of this case is also unclear at best as to whether or not the tenant was indeed a hoarder due to the cramped conditions in the apartment. But, that discreet legal question will have to wait for another day.

Trespass in an Eviction Case

Finally, in Federal National Mortgage v. Gordon, 91 Mass. App. Ct. 527 (2017), the Appeals Court recognized on the one hand that the Housing Court could hear a common law trespass claim. However, the Appeals Court reaffirmed that a post-foreclosure could not bring a trespass action, especially if the holdover tenants claimed leasehold rights after foreclosure.  The defendant tenants had a mortgage that they fell behind on. Following a foreclosure and during a summary process action, the tenants apparently executed a lease and one tenant moved out. The trespass action followed.

The Appeals Court recalled that the scope of the subject matter jurisdiction of the Housing Court was a classically thorny issue. On the one hand, the Housing Court was a court of limited jurisdiction but could also hear matters, including tort or contract actions, related directly or indirectly to the health, safety and welfare of any occupant or place used for human habitation. 91 Mass. App. Ct. at 531-532, citing G.L. c.185C, §3.  The presence of trespassers “will, in many cases, affect the health, safety and welfare of an owner or occupant” and thus was a tort action relating to health, safety and welfare. The Housing Court thus had subject matter jurisdiction.

However,  the action for was trespass was impermissible. The Appeals Court recalled that G.L. c.184, §18 proscribed any attempt to recover land except pursuant to summary process or any other proceeding authorized by law. For twenty-five years, the Supreme Judicial Court held that a foreclosure sale was not a “proceeding authorized by law” as the purchasers entered lawfully and were holdover tenants. Indeed, the tenants had no duty to inquire about the landlord’s status-and had not forcibly entered. Finally, there was no evidence in the record that the bank had constructive possession-any lapse between one tenant and the other tenant was too brief to indicate a possessory surrender-the record indicated otherwise.

This case reaffirms that summary process essentially occupies the field in post-foreclosure matters. To proceed on a trespass action, the bank has to overcome the command of Section 18 and show a forcible entry. A person’s mere presence is not enough-nor can they be imputed with knowledge that a bank does or does not own property. Only a true squatter or someone else who otherwise has no interest qualifies.

The case also represents another case in the long line delineating the subject matter jurisdiction of the Housing Court. Trespass certainly does, as the Appeals Court held, implicate the health, safety, and welfare of human occupants. The trickier issue will be how that plays out in a particular case in the Housing Court-and whether or not Housing Court dockets will see more actions.

Conclusion 

These eviction appeal decisions show that this area of law continues to be changing, and practitioners need to be aware of these recent decisions.  The benefits of having an experienced appellate attorney for an eviction appeal cannot be overstated.

Sherwin Law Firm Wins Foreclosure Appeal

foreclosure appeal

I’m pleased to announce that I, along with appellate attorney Joseph Schneiderman, won a foreclosure appeal this week in the Massachusetts Appeals Court.  The case, Nationstar v. Culhane (included below) concerns an important topic for appealing an eviction (“summary process”) case in Massachusetts: the importance of timely filing a notice of appeal.

Overview of Case

It would take much, much more than a single blog post to give the background on this case, or even the procedural history of this matter.  Here’s a quick synopsis.  The homeowner went through a foreclosure sale and faced a post-foreclosure eviction case by the foreclosing lender.  In such a case, the homeowner has a right to defend against the eviction by alleging that the foreclosure was not lawful.  Here, my client had a strong defense based on the lender’s failure to comply with paragraph 22 of her mortgage.

Case History

My client won her case at the District Court, where the foreclosing lender filed this eviction case.  Following my client’s win, the foreclosing lender appealed this case to the District Court Appellate Division.  The Appellate Division is a part of the District Court and hears appeals of most civil cases from the District Court.

The Appellate Division reversed the District Court’s decision, and ruled that the foreclosing lender should have won the eviction case.  I then appealed the case to the Massachusetts Appeals Court, which hears appeals decided by the Appellate Division.

Outcome of Foreclosure Appeal

The Appeals Court ruled in my client’s favor based on a critical argument we raised for my client: the foreclosing lender’s failure to timely file this foreclosure appeal.

Massachusetts eviction law has a short deadline for pursuing an eviction appeal: ten days.  As we argued to the court, previous decisions on this law hold that a failure to meet this deadline, for seemingly any reason, are grounds for dismissing the appeal.  Here, the foreclosing lender filed its notice of appeal after the ten-day deadline, which the Appeals Court agreed was grounds for dismissing the appeal.

Conclusion

This case has some really important lessons not just for a foreclosure appeal, but any appeal of an eviction case.  The deadline for such an appeal must be timely filed.  Often, the failure to timely appeal a civil case is not always fatal to one’s case; appeal courts have discretion to allow a untimely appeal for good cause.  Not so with eviction cases.  This case, along with many prior cases on this matter (discussed in the court’s decision below) suggest that there are few grounds for filing an eviction appeal late.

For this reason, I always recommend that lawyers and parties representing themselves in an eviction appeal err on the side of caution when preserving a right to appeal.   File the notice of appeal as soon as possible and make sure you have proof that the court and opposing party receive this notice.  Take no chances on this.  I have been known to jump in my car on the last day of the deadline to appeal and make a special trip to court if I have any reason to believe the notice of appeal was not timely received by the court.

This case also demonstrates the importance of working with an experienced appellate attorney on one of these matters.  The arguments in this case were highly technical and required a deep understanding of Massachusetts eviction law and appellate procedure.  If you find yourself involved in a similar foreclosure appeal, contact me to see if I can help.

 

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Damages for a Security Deposit Violation in Massachusetts

The Massachusetts Supreme Judicial Court issued an important decision on Massachusetts’s security deposit law earlier this year which clarifies the damages than a tenant can obtain from a security deposit violation.

In Phillips v. Equity Residential Management, LLC, the Supreme Judicial Court held that treble damages are not required for every security deposit violation.  Like Massachusetts’s security deposit law itself, Phillips is a complex case.

Overview of Massachusetts’s Security Deposit Law 

Massachusetts’s security deposit law heavily regulates a landlord’s acceptance, holding, and return of a tenant’s security deposit.  This law is so detailed that I, along with many other landlord/tenant attorneys, warn landlords to never accept a security deposit.  This law, among other things, has requirements on where a security deposit must be held, what information must be provided to a tenant about the acceptance of the deposit, and what deductions may be taken from the deposit at the end of the tenancy.

Damages for a Security Deposit Violation

Failure to comply with the security deposit law can come with harsh consequences.  The law imposes treble damages, attorney fees, and costs for failure to comply with many of its detailed requirements.  In Phillips, the Supreme Judicial Court clarified which security deposit violations permit treble damages against a landlord.

The security deposit law contains a number of “forfeiture” provisions, where a landlord is required to automatically return a deposit.  The law also imposes treble damages for a failure to “return to the tenant the security deposit or balance thereof to which the tenant is entitled after deducting therefrom any sums in accordance with the provisions of this section, together with any interest thereon, within thirty days after termination of the tenancy.”  Phillips determined whether a tenant gets treble damages for failing to return a portion of the deposit that was otherwise forfeited under the law.

Prior to Phillips, many courts took the position that treble damages applied anytime a landlord violated the security deposit law.  Now, the law is clear that for some violations of the law, a tenant is simply entitled to the full return of his deposit, without treble damages.

Conclusion 

While Phillips places limits on the damages one can receive for a security deposit violation, it would be a mistake to under estimate the importance of complying with this law if you are a landlord, and understanding its protections for tenants if your security deposit has been wrongfully withheld.

In my opinion, one of the dire consequences of Phillips is that tenants may not be able to obtain attorney fees for certain security deposit violations.  They may be able to get their full deposit back, but nothing for the expenses of hiring an attorney to assist with the case, making it cost prohibitive to hire a lawyer for such a matter: the reason why the harsh penalties of this law exist in the first place.

However, there is an often unknown law that may provide help in such a scenario.  G.L. c. 186, § 20 provides that, if there is a written lease agreement allowing the landlord to get attorney fees against a tenant, the tenant is also allowed attorney fees against a landlord for any violation of the lease agreement.  This law suggests that a tenant may be able to obtain attorney fees for security deposit violations that are not within the scope of treble damages, attorney fees, and costs, per Phillips.

If you find yourself involved with a security deposit violation, contact me for a consultation.  An experienced attorney is essential in one of these tricky matters.

Preserving a “Pinti” Defense – Paragraph 22 of the Standard Mortgage

The Massachusetts Appeals Court issued an important decision this week on preserving a “Pinti” defense under paragraph 22 of the standard mortgage.  In US Bank v. Milan, the Appeals Court ruled that a homeowner failed to preserve this foreclosure defense and was precluded from raising it in his foreclosure case (a full copy of this decision is below).

Overview of Paragraph 22 of the Standard Mortgage

Paragraph 22 of the standard mortgage (used for most residential home purchases) requires that a default notice be sent to a homeowner containing a number of required disclosures before a foreclosure sale can proceed.  In Pinti v. Emigrant Mortgage, the Supreme Judicial Court held that a lender must strictly comply with this mortgage requirement.  Failure to do so makes any subsequent foreclosure sale void.

Pinti, importantly, limited the homeowners who were entitled to this defense.  Initially, the decision only applied to those paragraph 22 notices sent after July 17, 2015 (the date of Pinti).  The Appeals Court subsequently extended the benefit of Pinti to those homeowners who had a pending appeal on the paragraph 22 issue, and later, to any homeowner who raised it as a defense in a pending trial court case.  In this present appeal, the Appeals Court needed to determine what counts to preserve this defense in a pending foreclosure case.

How Does a Homeowner Preserve a Paragraph 22 Defense? 

In this case, the homeowner was in a post-foreclosure eviction case, where the bank alleged to have foreclosed the home.  The homeowner was entitled to defend against the eviction by arguing that the foreclosure was void, precluding the bank from obtaining possession of the home.

Here, the homeowner appears to have answered the bank’s eviction lawsuit by using a printed answer form, which allows claimants to raise defenses and counterclaims by checking a box.  This homeowner made a general allegation that the foreclosure was void.  In response to the bank’s inquiry on the basis of this defense, the homeowner alleged that there was forgery in his case, and did not mention a failure to comply with paragraph 22 of his mortgage.  While this case was ongoing, the Supreme Judicial Court issued Pinti.  The trial judge ruled that Pinti applied because the homeowner preserved a Pinti defense in this case, and found the overall foreclosure to be void.

The Appeals Court disagreed, ruling that the homeowner listed forgery, and not a paragraph 22 defect, as the asserted grounds for the homeowner’s foreclosure defense.  In other words, the Court was not willing to let the homeowner “change horses midstream” and get the benefit of Pinti after stating a prior, separate basis for his foreclosure defense.

Conclusion 

Recent court cases have been favorable to foreclosed homeowners with a paragraph 22 defect.  Milan suggests that there are limits to who can get the benefit of Pinti  in their case, and that a failure to expressly raise this matter can be fatal to one’s defense.  This decision, however, really only applies to homeowners with a pending foreclosure case who received a defective paragraph 22 notice before July 17, 2015.  Homeowners who received a defective notice after this date will likely have much more leeway in raising a Pinti defense.

While the Court did not address this issue, Milan touches upon the problems of using forms in answering or bringing a lawsuit.  Such forms allowed a claimant to raise a defense or claim merely by “checking a box” and without providing any supporting facts or detail.  I have long believed that these forms are problematic and not proper under the requirements for raising a legal claimMilan suggests that Massachusetts appeal courts may be inclined to take a closer look at this issue in the future.  Regardless, this is a reason why the benefits of finding an experienced foreclosure defense attorney cannot be overstated.

US Bank v. Milan

SJC Extends Paragraph 22 Defense

The Supreme Judicial Court issued an important ruling last weekend extending the “paragraph 22 defense” to other homeowners facing foreclosure.  In Federal National Mortgage Association v. Marroquin, the Court extended the benefit of the prior Pinti v. Emigrant Mortgage decision to those homeowners who similarly challenged a foreclosure based on non-compliance with paragraph 22 of the standard mortgage (a full copy of the decision is included below).  This is alot of information to take in at once, so read on for a “non-lawyer” explanation!

Paragraph 22 of the standard mortgage is a provision in a typical mortgage agreement that requires a foreclosing entity to provide a default notice to borrowers prior to foreclosure.  This notice requires specific disclosures that need to be given to the borrower.  In the wake of the recent foreclosure crisis, many of these notices have had errors, and have not included all of the required disclosures.  A paragraph 22 defense is a challenge to a foreclosure based on non-compliance with this mortgage requirement.

In Pinti v. Emigrant Mortgage, the Supreme Judicial Court determined that the failure to strictly comply with this mortgage requirement made the foreclosure void.  Pinti, importantly, required “strict compliance” for this part of the mortgage: a borrower does not need to show any harm from such a defect to challenge the foreclosure.  The Court’s decision in Pinti was “prospective”: it would only apply to the homeowners in Pinti and future foreclosure challenges based on non-compliance with paragraph 22.  In Aurora Loan Services v. Murphy, the Appeals Court extended the Pinti ruling to other cases on appeal at the time of the Pinti decision.

In Federal National Mortgage Association v. Marroquin, the Supreme Judicial Court needed to decide whether a paragraph 22 defense could be raised by a homeowner who had a trial court case pending at the time of Pinti.  This would include post-foreclosure eviction cases and Superior and Land Court challenges to foreclosure.  In  Marroquin, the Supreme Judicial Court extended Pinti to these cases as well.  If a homeowner had raised a paragraph 22 defense in one of these cases at the time of Pinti, “strict compliance” would apply.

Marroquin will likely apply to only a small range of cases.  The Supreme Judicial Court did not suggest that the prospective ruling of Pinti has changed.  In other words, a homeowner who did not properly preserve a paragraph 22 defense will not be helped by Marroquin.  As this decision comes over 1.5 years after Pinti, there are likely many homeowners who had such viable defenses, but failed to preserve them, on the belief that Pinti’s  prospective ruling would not let this defense apply to their case.

This is my main complaint with Marroquin and the Supreme Judicial Court’s other decisions on paragraph 22.  The Court in Pinti knew that the issue of the paragraph 22 defense would come before the Court again.  Why the Court could not have addressed this matter in the first place, making these later decisions unnecessary, is beyond me.  Nonetheless,  Marroquin fully resolves the scope of this defense for homeowners with a paragraph 22 defect.

If you find yourself in need of assistance with foreclosure, contact me for a consultation.

Federal National Mortgage Association v. Marroquin

SJC Rules that Failure to Send a Postforeclosure Notice Does Not Invalidate A Foreclosure

The Supreme Judicial Court issued a decision this week on postforeclosure notices, and whether the failure to send one invalidates a foreclosure sale.  In Turra v. Deutsche Bank, the Court ruled that the failure to send one of these notices does not void a foreclosure (disclosure: this was my appeal!).  A full copy of the decision is below.

The law in question, G.L. c. 244, § 15A, requires a mortgagee to notify the local municipalities of a foreclosure thirty days after the sale has occurred.  As the Court acknowledged in Turra,  prior court decisions suggested that strict compliance with this law was required to perform a lawful foreclosure.  The question in Turra was whether this was such a requirement, and whether a failure to comply with this step would invalidate a foreclosure.  Turra determined this statute isn’t grounds for challenging foreclosures.

I don’t read Turra to suggest that a failure to comply with a postforeclosure notice requirement can never be used to challenge a foreclosure.  If a homeowner or someone else is actually harmed from a bank’s failure to send such a notice, this violation may potentially be a consumer protection claim.  Turra is clear, however, that such a violation, on its own, is not enough to be a foreclosure defense.

While Turra wasn’t the outcome I wanted, I’m pleased that the Supreme Judicial Court acknowledged the basis for my argument, and conceded  that its prior caselaw suggested this was a plausible defense.  The decision mentions two other decisions where courts came out the oppositie way on this question of law (one of these decisions was one of my other cases using this defense).  You can’t win ’em all!

Turra has an important lesson of wisely choosing a foreclosure defense strategy.  The Internet is filled with foreclosure defense hoaxes and myths that do struggling homeowners more harm than good in trying to save their homes.  A review of unsuccessful foreclosure defense cases in state and federal court shows dozens of cases lost on the same arguments that courts routinely reject.  My strategy in defending homeowners is to make arguments that have a basis in law, and reject arguments that don’t work.  I reject the “kitchen sink” approach to foreclosure defense, where one raises every argument they can think of, irrespective of whether the claim has any hope of succeeding.  It is far better, in my opinion, to stick with arguments that work, and try new approaches.   While not successful in this case, my legal argument on these postforeclosure notices succeeded in several of my other cases, and helped keep a deserving family in their home.  If you find yourself facing foreclosure, don’t rely on an Internet myth to defend yourself: contact an experienced attorney for assistance.

Decision

Attorney Sherwin Argues Foreclosure Appeal Before Massachusetts’s Supreme Judicial Court

SJC

I had the honor of arguing before the Massachusetts Supreme Judicial Court (“SJC”) this week on a foreclosure appeal.  The SJC is Massachusetts’s highest court and the final decision maker on Massachusetts law.  The SJC often takes cases where the law in a particular area is uncertain.  In recent years, the SJC has heard an increasing number of foreclosure cases, which shows that this area of law continues to evolve.

My appeal concerned whether G.L. c. 244, § 15A, a law requiring a mortgagee to inform a local municipality about a foreclosure sale thirty days after it happened, is a requirement of the foreclosure process.  Different courts across Massachusetts have taken different positions on this, making this a matter that the SJC needs to resolve.  Click here to watch the oral argument.

My experience before the SJC reminded me of the importance of having an attorney who knows and understands the process of pursuing an appeal.  A appeal is a review of a case that was heard before a trial judge or jury; the appellate judges do not hear the testimony of witnesses or review evidence, and are limited to reviewing the entire record presented in the lower court.  A foreclosure appeal is a particular challenge to bring: foreclosure law constantly changes, and a successful appeal requires knowing and understanding the most recent changes in the law.  My appeal will likely be decided in the next three to four months, stay tuned!

I was deeply humbled by my appearance before the SJC.  With the recent election forcing many Americans to look closely at our form of government, I had a chance to see Massachusetts’s highest court up close.  I many not always agree with the SJC’s decisions, but I can’t doubt the Court’s sincerity and devotion to the “rule of law” in our state.  I’m proud to be a Massachusetts attorney and look forward to continuing my practice in this great state.

If you are in need of an appellate attorney, contact me for a consultation.  The importance of having an experienced appellate attorney on your side can be the difference between winning or losing your case.

Appealing a Foreclosure Case

Courtroom

A recent Massachusetts Supreme Judicial Court decision illustrates the importance of properly appealing a foreclosure case.  The Court’s decision reaffirms that a homeowner has one–and only one–opportunity to appeal an unfavorable court decision.

In Eresian v. Merill Lynch Credit Corporation, the Supreme Judicial Court upheld the denial of a homeowner’s attempt to overturn a decision in a foreclosure case from the 1990s. The homeowner attempted to file an appeal of this decision in 2015, years after the 1993 foreclosure case.  The Appeals Court rejected this appeal, and stated that the case was closed.  The homeowner then attempted to petition the Supreme Judicial Court for a subsequent order to review her prior decision.  Here, the Supreme Judicial Court rejected this requested relief, noting that the homeowner had already obtained an appeal of her decision, and there was no reason for the Court to allow her the opportunity for another review of the case.

The Court’s decision in this case reaffirms an important lesson for homeowners fighting foreclosure: there are few, if any, “do overs” in matters of law.  If a homeowner loses their foreclosure case and wishes to appeal, they get one–and only one–chance at appeal. Rarely will a homeowner ever be able to come back later for a second shot.

With this in mind, homeowners should strongly consider consulting an experienced foreclosure defense attorney in appealing a foreclosure case.  The risks of not doing the job right the first time just aren’t worth it.

FHA Loan Foreclosure Requirements

SJC

The Massachusetts Appeals Court issued an important decision on FHA loan foreclosure requirements in Jose v. Wells Fargo Bank (full decision below).  This decision reaffirms the strict requirements that come with foreclosing one of these loans.

A Federal Housing Administration (“FHA”) loan is a loan guaranteed by the federal government, aimed at helping lower income Americans buy homes.  For purposes of foreclosure, FHA loans have much detailed and elaborate requirements than traditional, private loans.  One of these requirements is a “face-to-face meeting” prior to accelerating the loan and foreclosure. This requires the lender to actually meet with the borrower before going forward with the foreclosure process, in an effort to help avoid foreclosure.  This requirement has a practical purpose: the federal government backs these loans if the borrower defaults, so the lender should be making every effort possible to avoid foreclosure.

Jose v. Wells Fargo Bank concerned one of the exceptions to the face-to-face meeting requirement, which allows a lender to avoid this requirement if it has no offices within 200 miles of the borrower.  Wells Fargo argued that this exception applied because there were no branch offices of the mortgagee (the holder of the loan) within this distance from the borrower.  Wells Fargo, undeniably, had branch offices of its servicer within 200 miles of the borrower (who is responsible for the day to day responsibilities of administering the loan).

The Court rejected this argument, holding that under the plain terms of the law, an office within 200 miles of either the mortgagee or servicer does not allow a foreclosing entity to qualify for this exception to the FHA loan foreclosure requirements.  As such, the lender was required to do a face-to-face meeting with the borrower, and its failure to do so made the foreclosure void.

This decision is an important win for homeowners, in that it makes this exemption to the FHA loan foreclosure requirements less viable for many lenders, who frequently have loan servicing offices across the state.  The decision also reaffirms the need to strictly comply with these FHA loan requirements, and the consequences of a lender’s failure to do so.

If you have a FHA loan and are facing a possible foreclosure, contact me to see if I can be of assistance.

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Santos v. U.S. Bank: Loan Modification Denial

SJC

The Massachusetts Appeals Court issued an important decision last week in Santos v. U.S. Bank (full decision below) regarding a loan modification denial.  The Court rejected the borrower’s negligence claim, but acknowledge that other grounds exist for fighting a loan modification denial. (Disclaimer: I was involved briefly in both the trial court and appeal of this case).

In Santos, the homeowner was denied a loan modification under the Home Affordable Modification Program (“HAMP”), a federal program that encourages servicers to give struggling homeowners a loan modification.  HAMP, by all accounts, has been a mess: servicers routinely “loose” required paperwork for these applications, deny borrowers for baseless reasons, and stall the process as long as possible.  The failure to properly review these applications, in my opinion, is a major reason for thw continued foreclosure crisis across the country.

After being denied a loan modification, the homeowner in Santos sued the servicer on a claim of negligence: a cause of action against someone for failure to take proper care in doing something (negligence claims are often raised in personal injury cases).  One of the required elements for a negligence claim is that the opposing party have a duty of care to the claimant.  In Santos, the Appeals Court rejected the borrower’s lawsuit because the Court determined that the loan servicer owed no duty of care to the borrower for reviewing his loan modification (despite being a participant in the HAMP program).  Because the servicer owed no duty to the borrower, the borrower in Santos was not permitted to pursue a negligence claim.

The Appeals Court did, however, acknowledge that other grounds could be used for fighting a loan modification denial, such as a Consumer Protection Law (“Chapter 93A”) claim.  To bring such a claim, however, the borrower needs to do more than merely alleged that the servicer failed to follow the HAMP guidelines but instead, that the servicer committed unfair and deceptive business practices (a higher burden than negligence).

Santos illustrates a strange paradox in foreclosure defense: participating loan services in the HAMP program are required to consider homeowners for loan modifications, but failure to properly review a modification application, by itself, will not provide a homeowner with their “day in court” on these matters.  This occurrence is frustrating for homeowners (and foreclosure defense attorneys!) who see that an applicant is entitled to a loan modification, but may not necessarily have a legal cause of action on this important matter.

Santos also discussed another important legal question: whether homeowners can “split” foreclosure defenses in different cases. The Court ruled on the homeowner’s attempt to pursue a foreclosure defense that he had an opportunity to do in the prior, post-foreclosure eviction case (the homeowner filed this case after being evicted from the home).  The Court ruled that res judicata, a legal defense preventing a party from raising claims in multiple cases, barred the homeowner’s later attempt to pursue this defense.  A homeowner, simply put, gets “one bite at the apple” in fighting a foreclosure.  If a homeowner does not raise a foreclosure defense in their legal case, they run the risk of losing it forever.

So, what are the take home lessons from Santos?

  1. Pursuing a case for a loan modification denial requires a showing of a pattern of abuse by the lender in reviewing an application.  Homeowners pursuing a loan modification should always, always keep a paper trail on their application attempts to help build such a case if a lawsuit becomes necessary.
  2. A successful foreclosure defense requires a homeowner to pursue all of their potential claims in a lawsuit, or risk losing them down the road.  This often becomes an issue for homeowners who attempt to represent themselves in court, fail to raise important defenses, and find themselves with limited options if their initial lawsuit is unsuccessful: a reason why such claimants should speak with a foreclosure defense attorney to discuss their options.
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