2014-0185, Jillian Cohen Bergeron v. New York Community Bank

Superior Court (Delker, J.) that: (1) lift ed a preliminary injunction on the HICKS, J. The plaintiff, Jillian Cohen Bergeron, appeals an order of the

Bray on the brief, and Ms. Bray orally), as amicus curiae. New Hampshire Legal Assistance (Dennis B. Labb e and Stephanie A.

defendant. Longoria and Michael P. Marsille on the brief, and Ms. Longoria orally), for the Doonan, Graves & Longoria, LLC, of Beverly, Massachusetts (Reneau J.

Murphy on the brief and orally), for the plaintiff. Coughlin, Rainboth, Murphy & Lown, P.A., of Portsmouth (Kenneth D.

No. 2014 - 185 Rockingham

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh. us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concor d, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

the FDIC. The trial court made no finding as to whether the defendant held the Note. defendant was the current owner of the Note as well as the Mortgage, having purchased both from By affidavit submitted to the trial court, the defendant’s senior vice president averred that the 

own t he note.” foreclose because “[i]t appears that at the very least, [the defendant] does not falling behind on her payments, bu t challenged the defendant’s authority to enjoin the foreclosure sale and for an ex parte restraining order. She admitted 479: p. 2 25 (2013). On or about April 15, 2013, she filed a verified petition to sale on her home — the mortgaged property under the Mortgage. See RSA on or about March 19, 2013, of the defendant’s intent to conduct a foreclosure According to the allegations in the plaintiff’s pleadings, she was notified

number of endorsements appears in the record.  was also apparently transferred a number of times, because an allonge with a At some later date, MERS assigned the Mortgage to the defendant. The Note

property] . . . . not limited to, the right to foreclose and sell the [mortgaged the r ight: to exercise any or all of those interests, including, but (as nominee for Lender and Lender’s successors and assigns) has Instrument, but, if necessary to comply with law or custom, MERS legal title to the interests granted by Borrower in this Security . .. Borrower understands and agrees that MERS holds only

with power of sale, the [mortgaged property]. the successors and assigns of MERS with mortgage covenants, and nominee for Lender and Lender’s successors and as signs) and to does hereby mortgage, grant and convey to MERS (solely as

the plaintiff’s obligations under the Note and Mortgage, she Instrument.” The M ortgage also provides that, for the purposes of securing successors and assigns. MERS is the mortgagee under thi s Security corporation that is acting solely as a nominee for Lender and Lender’s mortgagee. More specifically, the M ortgage states: “MERS is a separate mortgagor, and Mort gage Electronic Registration Systems, Inc. (MERS) as the M ortgage. The M ortgage identifie s DMA as the lender, the plaintiff as the evidenced by the Note as well as the performance of her obligations under the (DMA). She also executed a mortgage (Mortgage) of even date securing the debt principal amount of $176, p. 2 250, in favor of Drew Mortgage Associates, Inc. October 25, 2006, the plaintiff executed a promissory note (Note), in the The trial court found, or the record supports, the following facts. On

and ( p. 2 2) dismiss ed her case. We affirm. foreclosure sale of her home by t he defendant, New York Community Bank; p. 3 3

Mendum, 5 N.H. 420, 4 p. 3 32 (1831). Similarly, we st ated that “an assignment of independent of the debt, and cannot be separated from the debt.” Southerin v. statute of frauds, because it is a mere incident to the debt, has no value mortgagee passes in al l cases with the debt, and that it is not within the in our case law. We long ago opined, for instance, “that the interest of the The concept that the note and mortgage are not severable has deep roots

issue before us is whether the defendant has authority to foreclose. Pomeroy Ltd. P’ship, 166 N.H. 447, 450 (2014) (quotation omitted). The narrow review the trial court’s application of the law to the facts de novo.” Ettinger v. the record.” Chase v. Ameriquest Mortgage Co., 155 N.H. 19, 21 (2007). “We findings of historical fact, where those findings are supported by evidence in “In conducting our review, we accord deference to the trial court’s

pursuant to RSA chapter 479. entitled to enforce the promissory note in order to conduct a foreclos ure sale that because “the mortgage and note are not severable,” a mortgagee must be however, are largely subsumed within the plaintiff ’s more general conten tion the defendant was entitled to enforce the Note. These specific arguments, be held by separate entities; and ( p. 3 3) failing to make the necessary finding that note; (2) finding that the plaintiff clearly intended that the Note and Mortgage the entity foreclosing a mortgage need not hold both the mortgage and the On appeal, the plaintiff argues that the trial court e rred in: (1) ruling that

acting as an agent for the entity which holds the note.” “has the authority to foreclose whether it actually holds the note or is merely sale to proceed. The court did so, ruling, in relevant part, that the defendant defendant requested that the court lift the injunction and allow the foreclosure Following denial of the plaintiff’s loan modification application, the

application in good faith.” loan modification [and]. . . [t] he defendant is required to consider the plaintiff’s The court ruled that “[t] he plaintiff is permitted to pursue her application for a on April 15, 201 p. 3 3, and the requested preliminary injunction on June 20, 2013. The trial court issued the requested ex parte temporary restraining order

sale.” its entitlement to enforce the note and its standing to conduct the foreclosure response to, [the plaintiff’s] loan m o di fi cation application, and provides proof of foreclosure “until [the defendant] gives reasonable consideration of, and preliminary and permanent injunctions halting further action toward restraining the defendant from holding the foreclosure sale and also sought it is the genuine holder of [her] note.” She sought an order temporarily later, again alleging that the defendant “h as not met its burden of proving that The plaintiff filed an amended verified petition approximately two months p. 4 4

review de novo. See Ettinger, 166 N.H. at p. 4 450; Collyns, 166 N.H. at 519. interpretation of either a deed or a contract is a question of law, which we language used in the contract” (quotation omitted)). In addition, t he ambiguity, the parties’ intent will be determined from the plain meaning of the intent”); State v. Col lyns, 166 N.H. 514, 519 (2014) (noting that “[a]bsent “[c]lear and unambiguous terms of a deed control how we construe the parties’ ambiguity. See Dumont v. Town of Wolfeboro, 137 N.H. 1, 5 (1993) (noting that intent with respect thereto is determined by its language unless there is Whether the Mortgage is considered a deed or a contract, the partie s’

an evidentiary hearing.” We disagree. its dete r mination based “only on the language in the mortgage” and “without intent presents a question of fact, and that the trial court erred when it made The plaintiff ’s argument rests up on the premise that the issue of her

and mortgage. intended or agreed that two distinct entities would hold the note as the Defendant here. There is no evidence that the Plaintiff the mortgage at some future unkno wn date to a third party such facts [that] the borrower “clearly” intended MERS’s assignment of was also the holder of the note. It is improper to infer from those interest only on behalf of the “lender.” As of that time, the lender At the time the mortgage is signed MERS h olds the security

of those instruments. Thus, the plaintiff asserts: Mortgage by separate entities at closing, but with respect to the later transfers court’s finding of her intent with respect to the holding of the Note and status at that time. Indeed, it appears that her real challenge is not to the trial and, therefore, we need not address her intent as it relates to each party’s nominee arrangement did not split the note and mortgage at the time of closing We will assume, without deciding, that the plaintiff is correct th at the

the powers and rights regarding the note and mortgage remained with [DMA].” that because MERS held the Mortgage in “only a representative capacity[,] [a]ll [DMA] and therefore not as a separate entity.” More specifically, she asserts separate entities. S he argues that at the time of closing, “MERS was acting for court’s finding that she clearly intended that the Note and Mortgage be held by the note and mortgage at their inception and, accordingly, challenges the trial the mortgagee. The plaintiff contend s that this arrangement does not separate — the repayment of the debt evidenced by the Note, but designate s MERS as Here, the Mortgage states that it secures to Lender — identified as DMA

Moore, 11 N.H. p. 5 55, 62 (18 p. 4 40). the mortgage, without an assignment of the debt, passes nothing.” Smith v. 5

the entry of her agent continued until there was an entry in opposition”). We 211, 213 (1909) (concluding that “the possession acquired by the mortgagee by premises was made by an agent of the mortgagee. Largey v. Taylor, 7 p. 5 5 N.H. publication, see RSA 479:19, II (2013), when entry upon the mortgaged right”). We have, however, upheld foreclosure by the mode of entry and ‘mortgagee’ may include any person claiming under such party or having his (providing, for purposes of statutory construction, that “[t]he word . . . a uthorized or required by the power.” RSA 479:25; cf. RSA 21:17 (2012) upon breach of the condition, give such notices and do such acts as are 479:25 itself merely states, in part, that “the mortgagee or his assignee may, may be instituted by an agent of the entity holding the right to foreclose. RSA We have never addressed whether a foreclosure under a power of sale

holds the note.” have the authority to foreclose if it did so “as an agent for the entity which defendant held the Note because it concluded that the defendant would also The court then implicitly found it unnecessary to determine whether the agent of the lender, the authority to exercise the power of sale upon a default.” indebtedness.” The trial court found that the Mortgage “gave MERS, as the New Hampshire law requires the foreclosing entity to be the owner of the to complete the statutory power of sale as authorized in RSA [chapter] 479. authority t o a nominee ‘mortgagee’ such as MERS with no interest in the debt The plaintiff next argues that “New Hampshire law does not provide

upon MERS’ s interest, which arises from the original mortgage contract.”). current mortgage holder]. [The mortgage holder’s] interest is thus dep endent (“Neither party disputes th e validity of the . . . assi gn ment from MERS to [the foreclose. See Citimortgage, Inc. v. Barabas, 97 p. 5 5 N.E.2d 805, 813 (Ind. 2012) not disputed, the terms of the Mortgage control the defendant’s right to (2003), and the validity of the assignment of the Mortgage to the defendant is of the assignment,” Stateline Steel Erectors v. Shields, 150 N.H. 332, 337 Because an “assignee’s rights are the same as those of the assignor at the time contend that there was any limit to DMA’s ability to assign its interest. assertion that the assignment was in any way invalid. Nor does the plaintiff MERS assigned its interest in the Mortgage to the defendant. There is no

unknown date to a third party.” expressed her intent that the Mortgage could be assigned “at s ome future MERS could assign their interests. By executing the Mortgage, the plaintiff Mortgage gave the plaintiff notice that both the original Lender (DMA) and successors and assigns.” The clear and unambiguous language of the successors and assigns of MERS” as “nominee for Lender and Lender’s the Mortgage. It clearly indicates that the conveyance was to MERS “and to the conveys to MERS “only legal title to the interests granted by [the plaintiff]” in MERS “solely as nominee for Lender and Lender’s successors and assigns” and Here, the Mortgage is unambiguous: it conveys the mortgaged property to p. 6 6

the defendant, as assignee of MERS, and any downstream assignee of DMA the Mortgage alone conclusively establishes an agency relationship between” r elationship). Accordingly, “the question becomes whether . . . the language of Bouffard, 1 p. 6 62 N.H. at 311 (reciting elements necessary to establish an agency original lender “maintained an independent agency relationship with MERS”); Cf. Metlife, 286 P.3d at 1156 (noting lack of direct evidence that assignee of agency relationship between the defendant and the current holder of the Note. before us is the Mortgage itself. There is no other independent evidence of an The only evidence of an agency relationship appearing in the record

upon the evidence before it.” Id. (citation omitted). evidence if a reasonable person could have reached the same decision based erroneous as a matter of law. The trial court’s findings are supported by the the trial court’s findings unless they are unsupported by evidence or are v. State Farm Fire & Cas. Co., 1 p. 6 62 N. H. 305, 311 (2011). “We will not disturb “[T]he existence of an agency relationship is a question of fact.” Bouffard

making factual findings as to whether [the defendant] properly held the note.” plaintiff’s argument that the trial court “erred in not granting a hearing and noteholder, if the agency finding is sustainable, we need not address the Given our conclusion above that an agent may foreclose on behalf of the omitted)). Thus, we now consider whether that implicit finding is sustainable. made subsidiary findings necessar y to support its general ruling” (quotation 158 N.H. 459, 4 p. 6 66 (2009) (noting that “[w]e must assume that the trial court defendant was an agen t of the noteholder. See In the Matter of Aube & Aube, defendant. Accordingly, the court mu st have implicitly found that the unnecessary to determine whether the Note had been validly assigned to the an agent for the entity which holds the note,” the trial court found it authority to foreclose whether it actually holds the note or is merely acting as When it lift ed the injunction on the theory that the defendant “has the

note holder’s behalf, the “enforcement of the mortgage . . . is proper”). holder has authority from the note holder to enforc e the mortgage on the Property: Mortgages § 5.4 comment e at 385 (199 p. 7 7) (stating that if the mortgage 28 p. 6 6 P.3d 1150, 1155 (Kan. Ct. App. 2012); s ee also Restatement (Third) of Bank, FSB, 68 A.3d 1069, 1089 (R.I. 2013); MetLife Home Loans v. Hansen, acting for the note holder can foreclose a mortgage. Bucci v. Lehman Brother s jurisdictions have reached a similar conclusion and have held th at an agent foreclosure proceedings under RSA 479:25. We note that courts in other — we conclude that an agent of the no teholder may properly institute mortgagee is the creditor” — in other words, the holder of the promissory note plaintiff is correct that “the foreclosure statutes . . . seem to assume that [the] in that manner. Accordingly, even assuming, without deciding, that the 479:25 may not similarly be inst ituted by the agent of one entitled to foreclose see no reason why foreclosure by sale under the power pursuant to RSA 7

lifti ng the injunction and dismissing the action. We need not address whether exercise the power of sale. Therefore, we hold that the trial court did not err in conclude that the defendant has the authority, as agent of the noteholder, to challenge the validity of the assignment of either the Note or the Mortgage, we both DMA and MERS could assign their interests, and the plaintiff does not lender (DMA) and the mortgagee (MERS), and the Mortgage contemplate s that Because the Mortgage evidences an agency relationship between the

matter how many times either or both of them were assig ned. together, intertwined, as part of one transaction,” Metlife, 286 P.3d at 115 p. 7 7, no Note and the Mortgage indicates that the parties[] intended to keep them instrument] dated the same date as this Note.” “The plain language of both the Note indicates that it is secured by “a Mortgage. . . [or other security they used to describe that relationship” (quotation omitted)). In addition, the between MERS and the Lender and its successors . . . regardless what term and sell the Property” is “more than sufficient to create an agency relationship which granted MERS rights “including but not limited to, the right to foreclose 441 B.R. 638, 645 (Bankr. W.D. Mo. 2010) (stating that the d eed of t rust, parties intended to designate MERS as an agent of the lender.”); In re Tucker, under the terms of the . . . mortgage and MERS’s own rules indicate that the relationship. See Barabas, 975 N.E.2d at 814 (“Taken together, MERS’s rights behalf, albeit in a limited way, thus evid enc ing the existence of an agency pro perty].” The agreement plainly authorizes MERS to act on the Lender’s including, but not limited to, the right to foreclose and sell the [mortgaged assigns) power of sa le and “the right: to exercise any or all of those interests, expressly grant s MERS (solely as nominee for the l ender and its successors and relationship is akin to that of a principal and agent.”). The Mortgage also consistent with an agency relationship”); Bucci, 68 A.3d at 1082 (“A nominee 975 N.E.2d at 813 - 14 (stating that the dictionary definitions of “nominee” “a re which it is a nominee as one of principal (lender) and agent (MERS). Barabas, characterized the nominee relationship between MERS and the lender for Dictionary 1211 (10th ed. 2014). Courts in other jurisdictions have party who holds bare legal title for the benefit of others.” Black’s Law designated to act in place of another, usu[ally] in a very limited way[;] . . . [a] the term “nominee,” Black’s Law Dictionary de fines “nominee” as “[a] person successors and assigns.” Although the Mortgage does not specifically define corporation that is acting solely as a nominee for Lender and Lender’s from other circumstances”). T he Mortgage states that “MERS is a separate mortgage “from the terms of the assignment, from a separate agreement, or relationship may arise between the holder of the note and the holder of the Property: Mortgages, supra § 5.4 comment e at 385 - 86 (stating that an agency relationship between DMA (the lender) and MERS. See Resta tement (Third) of T he provisions of the Mortgage demonstrate the existence of an agency

1156 - 5 p. 7 7. W e believe that it does. See i d. at 1157. that held the Note at the commencement of foreclosure. Metlife, 2 p. 8 86 P.3d. at 8

DALIANIS, C. J., a n d CONBOY, LYNN, and BASSETT, JJ., concurred.

holder, a party who holds only the mortgage has the authority to foreclose. absent an agenc y relationship between the note holder and the mortgage legitimately challenged by the plaintiff. We also need not decide whether, the defendant could foreclose if the agency relationship was irregular or