Mortgages – Claim preclusion

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Where a plaintiff has brought suit against a defendant law firm over a notice of foreclosure letter she received, her claims are barred by the doctrine of claim preclusion given a dismissal order in a 2010 suit.

“The Harmon defendants [Harmon Law Offices, P.C., Commonwealth Auction Associates, Inc. and Northeast Abstract Company] contend that [plaintiff Leslie] Epps’ claims are precluded because the parties and the underlying facts in the 2010 Action and the present action are identical. Furthermore, the Harmon defendants argue that Commonwealth Auction and Northeast Abstract are in privity with Harmon Law, so any action against them is also precluded. Epps contends that her claims cannot be precluded because the present action alleges that Harmon Law undertook to foreclose on behalf of a party who did not hold title to the mortgage. Such allegations were not considered in the ruling in the 2010 Action. Furthermore, Epps argues that she was denied an opportunity to amend her complaint to add the claims in the present action. After consideration, the court concludes that the present action against the Harmon defendants is precluded. …

“Harmon Law was undisputably a party in both the 2010 Action and the instant case. According to the complaint, Harmon Law, Commonwealth Auction, and Northeast Abstract are three separate legal entities owned, operated, and managed by Mark P. Harmon. The complaint alleges that there is no separation in the business operations between the three companies and the same personnel who work for Harmon Law perform the work at Commonwealth Auction and Northeast Abstract. It follows that Harmon Law, the named party in the first suit, represented the interests of Commonwealth Auction and Northeast Abstract, and thus, there is privity of parties. …

“Epps argues that because in the first case, she implicitly acknowledged that the foreclosure was valid and, in the present action, she asserts that the foreclosure petition is void, the two causes of action are different. Epps’ argument misunderstands the doctrine of claim preclusion. A claim in a later case is considered the same as the one in the prior case for claim preclusion purposes if it is derived from the same transaction or series of connected transactions. … The doctrine applies even if the plaintiff brings forth different evidence, legal theories, or remedies in the subsequent action. …

“Both the 2010 Action and the present action arise out of the same series of events surrounding the foreclosure of the mortgage. Epps had the opportunity to assert her current claims in the prior suit. … In fact, she did assert claims for unfair debt collection practices and intentional infliction of emotional distress in the first suit. Even though her current complaint proceeds on a different theory of liability, there is still identity of the cause of action for claim preclusion purposes. …

“Epps contends that she is allowed to assert the present claims against these parties because the judge in the 2010 Action did not allow her to amend her complaint to proceed with other causes of action. This argument is misleading. Epps filed a motion for reconsideration requesting leave to amend the complaint after it was dismissed. However, before the motion was decided, she withdrew it and filed a new complaint. Epps cannot properly argue that she was denied an opportunity to assert her present claims in the first suit. The 2010 Action was dismissed pursuant to Mass. R. Civ. P. 12(b)(6) for failure to state a claim. Under Massachusetts law, such a dismissal operates as an adjudication on the merits with claim preclusion effect.”

Assignment issue

“In Count V of her complaint, Epps seeks a declaration that the purported sale of the property was invalid. She argues that there was never an assignment from MNI to Countrywide or MERS before Countrywide instituted foreclosure proceedings. Therefore, title was not established in Countrywide and the foreclosure is void. …

“The issue here is whether the assignment of the MNI mortgage to Countrywide occurred before notice of foreclosure and subsequent sale. The sequence of events alleged in the complaint calls into question the timing of the assignment. Epps claims that she received notice of an intent to foreclose by letter dated April 14, 2008. The letter stated that Countrywide was the holder of the mortgage. The following day, Countrywide filed the complaint to foreclose in land court. The assignment of the mortgage from MNI to Countrywide was recorded on September 15, 2008. According to Epps, MNI was still the holder of the mortgage at the time of the notice and filing of the, complaint for foreclosure.

“The defendants argue that the assignment of the mortgage occurred on April 4, 2008 even though it was not recorded until September 15, 2008. April 4, 2008 is listed as the date the assignment became effective on the instrument filed with the registry of deeds. However, merely listing an effective date on a postforeclosure assignment would not convey authority to foreclose on a party who did not hold the mortgage. … While the assignment may have occurred on April 4, 2008, this court is unable to draw such a conclusion solely from the effective date listed by MERS on the assignment. Based on the factual allegations in the complaint, Epps has stated a plausible claim for relief. …”

Epps v. Bank of America, N.A., et al. (Lawyers Weekly No. 12-083-13) (14 pages) (MacLeod, J.) (Suffolk Superior Court) (Civil Action No. 12-1282) (June 14, 2013).

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