sheedy v. deutsche bank national trust c, 1st cir. (2015)

7/26/2019 Sheedy v. Deutsche Bank National Trust C, 1st Cir. (2015)

1/26

United States Court of AppealsFor the First Circuit

No. 14- 1246

I N RE: LAURA SHEEDY,

Debt or .

LAURA SHEEDY,

Pl ai nt i f f , Appel l ant ,

v.

DEUTSCHE BANK NATI ONAL TRUST COMPANY, as Tr ust ee;and J PMORGAN CHASE BANK, NATI ONAL ASSOCI ATI ON,

Def endant s, Appel l ees.

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF MASSACHUSETTS

[ Hon. Geor ge A. O' Tool e, U. S. Di st r i ct J udge]

Bef or e

Howard, Chi ef J udge,Tor r uel l a and Kayat t a, Ci r cui t J udges.

Davi d G. Baker , f or appel l ant .Donn A. Randal l , wi t h whomCarol E. Kamm, J ami e L. Kessl er and

Bul kl ey, Ri char dson and Gel i nas, LLP, wer e on br i ef , f or appel l ees.

Sept ember 1, 2015


2/26

TORRUELLA, Circuit Judge. Thi s case i nvol ves an at t empt

by a Chapt er 13 debt or t o avoi d f or ecl osure on her r esi dent i al

mor t gage t hr ough a l ender l i abi l i t y sui t i n an adver sar y pr oceedi ng

wi t hi n her bankr upt cy case. Agr eei ng wi t h t he bankr upt cy cour t , we

f i nd al l cl ai ms t o be ei t her t i me- bar r ed or wi t hout mer i t , and

t her ef or e af f i r m i t s gr ant of summar y j udgment i n f avor of t he

credi t or s.

I. Background

A. The Loan and Mortgage

We revi ew t he f act s i n t he l i ght most f avor abl e t o

Debt or - Appel l ant Laur a Sheedy, t he par t y opposi ng summary j udgment .

See Rosaur a Bl dg. Corp. v. Muni ci pal i t y of Mayagez, 778 F. 3d 55,

58 ( 1st Ci r . 2015) ( ci t i ng Agust yReyes v. Dep' t of Educ. of P. R. ,

601 F. 3d 45, 48 ( 1st Ci r . 2010) ) ; I n r e I annochi no, 242 F. 3d 36, 39

( 1st Ci r . 2001) ( appl yi ng the same st andar d i n a bankrupt cy

appeal ) . Sheedy and her husband are sel f - empl oyed and have worked

i n var i ous r eal est at e busi nesses. She consi der s her sel f

"r el at i vel y sophi st i cat ed i n r eal est at e mat t er s ( but not

f i nance) , " and she has hel d a r eal est at e br oker l i cense si nce t he

ear l y 1980s.

I n 1987, Sheedy and her husband purchased a r esi dence i n

Lexi ngt on, Massachuset t s. Over t he year s, t he coupl e cont i nual l y

t r ansf er r ed t he pr oper t y' s t i t l e amongst t hemsel ves and t he

Car di nal Tr ust ( t he "Trust " ) - - i n whi ch Sheedy hol ds a benef i ci al

-2-


3/26

i nt er est and i s al so t he t r ust ee - - wi t h t he pur pose of r ef i nanci ng

or usi ng l oan pr oceeds f or ot her l egi t i mat e pur poses. I n one such

t r ansact i on i n 2003, she conveyed t i t l e f r om t he Tr ust t o her sel f .

Then, i n 2004, she r ef i nanced t he propert y ( t he "2004

Tr ansact i on") . For t he 2004 Tr ansact i on, Sheedy execut ed a

pr omi ssor y not e ( t he "Not e" ) f or $810, 000 i n f avor of Washi ngt on

Mut ual Bank ( "WAMU") . A mor t gage cor r espondi ng t o t he 2004

Tr ansact i on ( t he "Mor t gage") was al so gi ven t o WAMU and was

pr oper l y r ecor ded on Apr i l 21, 2004.

The Not e provi ded f or an i nt er est r at e of 3. 625%f or f i ve

year s. Then, t he i nt er est r at e was set t o change annual l y by

addi ng 2. 75% t o t he weekl y aver age yi el d on Uni t ed St ates Treasur y

secur i t i es adj ust ed t o a const ant mat ur i t y of one year , based on an

i ndex i ssued by t he Feder al Reserve Boar d. Whatever t he r esul t i ng

r at e was under t hat f or mul a, t he t er ms of t he Not e r equi r ed t hat i t

be bet ween 2. 75% and 8. 625%. Addi t i onal l y, af t er t he f i r st

adj ust ment f ol l owi ng t he i ni t i al f i ve- year per i od, al l ot her

changes coul d not be by i ncr ement s of more t han 2%. The i ni t i al

mont hl y payment under t he Not e was $4, 109. 56, but t he t erms of t he

Not e were amended i n an addendum so t hat Sheedy woul d onl y pay

i nt er est dur i ng t he f i r st f i ve year s. Thi s resul t ed i n Sheedy onl y

havi ng t o pay $2, 446. 87 mont hl y f or t he f i r st f i ve year s.

I n 2008, f ederal r egul at ors cl osed WAMU and t he Federal

Deposi t I nsurance Corporat i on ( "FDI C" ) was named r ecei ver .

-3-


4/26

J PMor gan Chase Nat i onal Associ at i on ( "Chase" ) acqui r ed cer t ai n WAMU

asset s f r om t he FDI C, i ncl udi ng an assi gnment of t he Mor t gage.

Chase t hen assi gned t he Mor t gage t o Deut sche Bank Nat i onal Trust

Company ( "Deut sche Bank, " and, t ogether wi t h Chase, t he "Secur ed

Cr edi t or s" ) , as Tr ust ee f or WAMU Mor t gage Pass- Thr ough Cer t i f i cat es

Ser i es 2004- AR4 ( t he "Secur i t i zed Tr ust " ) . Chase cont i nued

ser vi ci ng t he l oan.

I n 2009, by t he t i me t he f i r st adj ust ment i n payment was

schedul ed, Sheedy was cur r ent i n her l oan but f aced a decl i ne i n

busi ness as t he r ecess i on began. The mont hl y payment j umped t o

$4, 055. 05 - - an amount sl i ght l y l ess t han t he number pr ovi ded by

t he t er ms of t he Not e, i gnor i ng t he i ni t i al i nt er est - onl y per i od

grant ed under t he addendum. Sheedy coul d not meet t he new payments

and she f el l i nt o def aul t .

Sheedy retai ned MFI - Mi ami - - a mor t gage f r aud

i nvest i gat i on f i r m t hat does not engage i n t he pr act i ce of l aw - -

t o anal yze her l oan document s and det ermi ne whet her she had been

mi sl ed as to t he t erms of t he Not e and Mor t gage. MFI - Mi ami

pr ovi ded her wi t h a "compr ehensi ve anal ysi s" of t he 2004

Tr ansact i on. The r eport st at ed t hat " [ t ] here ar e ser i ous probl ems

wi t h t he way t hi s l oan was or i gi nated . . . whi ch wer e commi t t ed by

t he l ender . I t cont ai ns el ement s of i l l egal bai t and swi t ch and

decept i on pr act i ces. " For exampl e, t he r epor t ment i oned t hat t he

-4-


5/26

Tr ut h i n Lendi ng st at ement 1 di f f er s f r om t he t er ms of t he Not e

because i t st at ed t hat t he payment begi nni ng on t he si xt y- f i r st

mont h, i . e. , at t he t i me of t he f i r st adj ust ment , woul d be

$4, 331. 44. Thus, Sheedy had been t ol d by WAMU t hat t he f i r st

payment due af t er t he adj ust ment woul d i n f act be hi gher t han what

t he Not e i t sel f r ef l ect ed, and even hi gher t han what she was

act ual l y r equi r ed t o pay when t he adj ust ment occur r ed. Al so, t he

Tr ut h i n Lendi ng st at ement di d not di scl ose t hat t he payments f or

t he f i r st f i ve year s woul d onl y i ncl ude i nt er est and no pr i nci pal

woul d amor t i ze.

B. The Bankruptcy Case

On J une 8, 2010, af t er Deutsche Bank commenced

f or ecl osur e pr oceedi ngs, Sheedy f i l ed f or pr ot ect i on under Chapt er

13 of t he Bankr uptcy Code, 11 U. S. C. 1301 et seq. Then, on

J ul y 20, 2010, she f i l ed a Chapt er 13 pl an pur suant t o 11 U. S. C.

1321. As par t of her pl an, Sheedy r ai sed a ser i es of al l egat i ons

of l ender l i abi l i t y, i ncl udi ng t hat t he Mor t gage was resci ndabl e

under t he Tr ut h i n Lendi ng Act , 15 U. S. C. 1601- 1667f ( "TI LA" ) ,

and that t he Secur ed Cr edi t ors vi ol ated Massachuset t s Gener al Laws

Chapt er 93A, 1- 11 ( "Chapt er 93A") , as wel l as "gener al

pr i nci pl es of equi t y under Massachuset t s l aw" as st at ed by t he

1 Pur suant t o Subpart C of Regul at i on Z of t he Feder al ReserveBoar d, a l ender i n a r ef i nanci ng t r ansact i on i s r equi r ed t o pr ovi dea di scl osur e st at ement cont ai ni ng, among ot her dat a, t he paymentschedul e, t he var i abl e r at es, and t he t ot al payment s on t her emai ni ng obl i gat i on. 12 C. F. R. 226. 18, 226. 20.

-5-


6/26

Massachuset t s Supreme J udi ci al Cour t i n Commonweal t h v. Fr emont

I nv. & Loan, NO. 07- 4373, 2008 WL 517279 ( Mass. Super . Feb. 26,

2008) , af f ' d as modi f i ed, 897 N. E. 2d 548 ( Mass. 2008) . The pl an

al so pr oposed t hat , af t er r esci ssi on, t he pr i nci pal owed under t he

Mor t gage be t r eat ed as an unsecur ed cl ai m of Sheedy' s. That i s,

i nst ead of t ender i ng t he f ul l amount of t he l oan i n exchange f or

t he Mor t gage as i f t he 2004 Transact i on had never occur r ed, Sheedy

woul d onl y pay a f r act i on, as she woul d f or al l ot her unsecur ed

cl ai ms.

Deut sche Bank f i l ed a pr oof of cl ai m ( t he "Secur ed

Cl ai m") pr eservi ng i t s st at us as a secur ed cr edi t or i n t he amount

of $842, 908. 47 due under t he Mor t gage, and obj ect i ng t o t he

conf i r mat i on of t he pl an. 2 On Apr i l 26, 2011, Sheedy f i l ed t he

i nst ant adver sary pr oceedi ng t o have t he bankrupt cy cour t r esol ve

her l ender l i abi l i t y cl ai ms, addi ng t hat Deut sche Bank and Chase

wer e al so l i abl e f or f r aud, decei t , and mi sr epr esent at i on on t he

basi s t hat WAMU pr ovi ded her wi t h i naccur at e or f al se i nf or mat i on

concerni ng t he t erms of t he Not e and t he Mor t gage. Sheedy al so

obj ect ed t o t he Secur ed Cl ai m and chal l enged Deut sche Bank' s

st andi ng as her credi t or . The Secur ed Cr edi t or s deni ed t he

al l egat i ons and, f ol l owi ng di scover y, f i l ed a mot i on f or summar y

j udgment .

2 The Secur ed Cl ai m was l at er t r ansf er r ed t o Chase.

-6-


7/26

C. The Bankruptcy Court Judgment

The bankr upt cy cour t grant ed summar y j udgment i n f avor of

t he Secur ed Cr edi t ors and i ssued a memorandumexpl ai ni ng t he bases

f or i t s deci si on. I n r e Sheedy, 480 B. R. 204 ( Bankr . D. Mass.

2012) . As t o t he TI LA cl ai m, t he bankrupt cy cour t hel d t hat i t was

t i me- bar r ed si nce Sheedy f i r st br ought t hi s cl ai m wi t hi n t he

bankrupt cy case i n 2010. The st at ut e of l i mi t at i ons f or cl ai ms f or

r esci ssi on under TI LA var i es dependi ng on t he ci r cumst ances, but i s

- - at most - - t hr ee year s af t er t he ext ensi on of credi t . 15 U. S. C.

1635( f ) . The 2004 Tr ansact i on occur r ed i n Apr i l 2004. Thus, any

at t empt t o r esci nd was i ni t i at ed wel l af t er t he r i ght was

ext i ngui shed by t he st at ut e of l i mi t at i ons.

Regardi ng t he Chapt er 93A cl ai m, t he bankr upt cy cour t

f ound t hat Sheedy f ai l ed t o send a wr i t t en demand pr i or t o

commenci ng sui t and t hat she f ai l ed t o even speci f y under whi ch

sect i on of Chapt er 93A her cl ai m ar ose. 3 I t concl uded t hat t he

Chapt er 13 pl an by i t sel f di d not const i t ut e a demand as r equi r ed

by Massachuset t s General Laws Chapt er 93A, 9, and t he appl i cabl e

3 We note t hat Sheedy' s ver i f i ed compl ai nt i n t he adver sarypr oceedi ngs per f unct or i l y al l eges t hat her cl ai munder Chapt er 93Ai s based upon t he f act s t hat : ( 1) t her e was a TI LA vi ol at i on; ( 2)

she had demanded r esci ss i on i n her Chapt er 13 pl an; ( 3) "Deut scheBank obt ai ned t he l oan at t he t i me when i t was i n def aul t " ; ( 4)Chase i s a servi ci ng agent of Deut sche Bank, and t hus t he l at t er i sl i abl e f or t he act i ons of t he f or mer on agency gr ounds; and ( 5) t heact s of Deut sche Bank t hr ough Chase were "unf ai r and decept i ve"wi t hi n t he meani ng of Chapt er 93A. Ther e i s no f ur t her di scussi onas t o why t hi s const i t ut ed a vi ol at i on of Chapt er 93A.

-7-


8/26

st at ut e of l i mi t at i ons had r un because act i ons ari si ng under

Chapt er 93A "shal l commence onl y wi t hi n f our years next af t er t he

cause of act i on accr ues. " Mass. Gen. Laws ch. 260, 5A. Si nce

t he 2004 Tr ansact i on i n whi ch t he al l eged unf ai r and decept i ve

pr act i ces occur r ed cl osed i n Apr i l 2004, t he st at ut e of l i mi t at i ons

f or Sheedy' s Chapt er 93A cl ai ms r an out i n Apr i l 2008.

Wi t h r espect t o Sheedy' s cl ai mt hat t he 2004 Tr ansact i on

was al so t he resul t of f r aud, decei t , or mi sr epr esent at i on, as WAMU

pr ovi ded her wi t h i naccur at e or f al se i nf or mat i on concer ni ng t he

t er ms of t he l oan, t he bankrupt cy cour t hel d t hat Sheedy f ai l ed t o

pl ead t he f r aud al l egat i ons wi t h par t i cul ar i t y. The bankrupt cy

cour t added t hat i t woul d have r eached t hat concl usi on even i f i t

had t aken i nt o consi der at i on t he al l egat i ons cont ai ned i n t he

r epor t pr epared by MFI - Mi ami . 4 Besi des t he i nsuf f i ci ency of t he

4

Sheedy i nt r oduced t he r epor t and i ncor por at ed i t by r ef er encei nt o t he al l egat i ons i n her compl ai nt . The bankrupt cy cour t st r uckt he r epor t f r om t he r ecor d on t he gr ounds t hat Sheedy f ai l ed t ost at e t he pr epar er ' s qual i f i cat i ons as an exper t pur suant t oFeder al Rul e of Evi dence 702. See Poul i s- Mi not t v. Smi t h, 388 F. 3d354, 359 ( 1st Ci r . 2004) ( "Feder al Rul e of Evi dence 702 pr ovi dest hat an exper t must be qual i f i ed t o test i f y based on t he exper t ' sknowl edge, ski l l , exper i ence, t r ai ni ng or educat i on. I t i s t her esponsi bi l i t y of t he t r i al j udge t o act as gat ekeeper and ensur et hat t he exper t i s qual i f i ed bef or e admi t t i ng exper t t est i mony. "( ci t i ng Cor r ea v. Cr ui ser s, a Di v. of KCS I nt ' l , I nc. , 298 F. 3d 13,24 ( 1st Ci r . 2002) ) ) . Sheedy i ncl uded t he bankrupt cy cour t ' s

r ef usal t o admi t t hi s evi dence as an i ssue i n her summary of t hef act s on appeal , but f ai l ed t o devel op any ar gument s, whi ch i ssuf f i ci ent gr ound f or us not t o consi der t he i ssue. See Uni t edSt at es v. Zanni no, 895 F. 2d 1, 17 ( 1st Ci r . 1990) ( "[ I ] ssuesadver t ed t o i n a per f unct ory manner , unaccompani ed by some ef f or tat devel oped argument at i on, are deemed wai ved. " ) . Fur t hermore, wewoul d gi ve def er ence t o t he bankrupt cy cour t ' s deci si on, because

-8-


9/26

pl eadi ngs, t he bankr upt cy court hel d t hat Deut sche Bank and Chase

est abl i shed t hat t he FDI C r et ai ned l i abi l i t y r el at i ng t o bor r ower s'

cl ai ms pursuant t o t he Pur chase and Assumpt i on Agreement bet ween

t he FDI C, as recei ver of WAMU, and Chase. That i s, Chase never

assumed any l ender l i abi l i t y of WAMU. 5

Wi t h r egar d t o Sheedy' s obj ect i on t o t he Secur ed Cl ai mon

t he basi s t hat t he Secur ed Cr edi t or s f ai l ed t o expl ai n how t he

cost s and f ees i ncl uded i n t he amount cl ai med were "r easonabl e and

necessar y, " t he bankrupt cy cour t concl uded that Sheedy' s cl ai mwas

i mpr eci se and t hat Sheedy had been pr ovi ded suf f i ci ent i nf or mat i on

i n t he f or m of i nvoi ces, bi l l s, checks, and r ecei pt s t o enabl e her

t o speci f y whi ch cost s and f ees were unr easonabl e and unnecessary.

Sheedy di d not set f or t h t he speci f i c gr ounds f or her obj ect i on and

f ai l ed t o meet her bur den.

Fi nal l y, t he bankrupt cy cour t hel d that Deut sche Bank had

st andi ng to i ni t i at e f or ecl osur e pr oceedi ngs agai nst Sheedy because

"[ t ] he t r i al cour t has br oad di scret i onar y power s i n qual i f i cat i onof exper t s, and t hat cour t ' s deci si on wi l l be af f i r med unl ess t her ei s cl ear er r or . " Poul i s- Mi not t , 388 F. 3d at 360 ( al t er at i onomi t t ed) ( i nt er nal quot at i on mar ks and ci t at i on omi t t ed) . I n anyevent , even i f we wer e t o consi der t he r eport , we woul d st i l laf f i r m t he di smi ssal of al l cl ai ms, f or t he r easons expl ai nedbel ow.

5 See Yeomal aki s v. F. D. I . C. , 562 F. 3d 56, 60 ( 1st Ci r . 2009)( "When Washi ngt on Mutual f ai l ed, Chase Bank acqui r ed many asset sbut i t s agr eement wi t h t he FDI C r et ai ns f or t he FDI C any l i abi l i t yassoci at ed wi t h bor r ower cl ai ms f or payment of or any l i abi l i t y t oany bor r ower f or monet ar y rel i ef , or t hat pr ovi de f or any ot herf or mof r el i ef t o any bor r ower . " ( ci t at i ons and i nt er nal quot at i onmarks omi t t ed) ) .

-9-


10/26

i t submi t t ed evi dence t hat i t hol ds t he Not e, whi ch was endor sed i n

bl ank and wi t hout r ecour se by WAMU, and t hus i s payabl e t o t he

bear er . I n r eachi ng t hi s concl usi on, t he bankrupt cy cour t

di smi ssed Sheedy' s cl ai ms t hat t he Mort gage was not val i dl y

assi gned to t he Secur i t i zed Tr ust under t he ter ms of t he Pool i ng

and Ser vi ce Agreement ( "PSA") because t he Mor t gage was ass i gned i n

2010 but t he Secur i t i zed Trust had been f ormed i n 2004.

Sheedy chal l enged t hi s deci si on bef or e t he di st r i ct

cour t , whi ch t hen af f i r med t he bankrupt cy cour t . 6 Thi s appeal

f ol l owed.

II. Discussion

A. Standard of Review and Summary Judgment

When r evi ewi ng t he or der of a di st r i ct cour t af f i r mi ng a

bankr upt cy cour t ' s j udgment , we " i ndependent l y exami ne t he

bankr upt cy cour t ' s deci si on, r evi ewi ng f i ndi ngs of f act f or cl ear

er r or and concl usi ons of l aw de novo. " I n r e Nosek, 544 F. 3d 34,

43 ( 1st Ci r . 2008) ( al t er at i on omi t t ed) ( quot i ng I n r e Nor t hwood

Pr ops. , LLC, 509 F. 3d 15, 21 ( 1st Ci r . 2007) ) ; I n r e SPM Mf g.

Corp. , 984 F. 2d 1305, 1310- 11 ( 1st Ci r . 1993) . Thus, we cede no

def er ence t o t he det er mi nat i ons made by the di st r i ct cour t i n i t s

r evi ew, "but assess t he bankrupt cy cour t ' s deci si on di r ect l y. "

6 Sheedy v. Deut sche Bank Nat ' l Tr . Co. , No. 1212302, 2014 WL691612 ( D. Mass. Feb. 21, 2014) .

-10-


11/26

I n r e Am. Car t age, I nc. , 656 F. 3d 82, 87 ( 1st Ci r . 2011) ( ci t i ng I n

r e Car p, 340 F. 3d 15, 21 ( 1st Ci r . 2003) ) .

A part y request i ng summary j udgment i s ent i t l ed t o i t

when t her e i s " no genui ne di sput e as t o any mater i al f act and t he

movant i s ent i t l ed t o j udgment as a mat t er of l aw. " Fed. R. Ci v.

P. 56( a) ; see al so Per r y v. Roy, 782 F. 3d 73, 77- 78 ( 1st Ci r .

2015) . " I n bankr upt cy, summary j udgment i s gover ned i n t he f i r st

i nst ance by [ Feder al Rul e of ] Bankrupt cy [ Pr ocedur e] 7056. By i t s

expr ess t er ms, t he r ul e i ncor por at es i nt o bankrupt cy pr act i ce t he

st andar ds of Rul e 56 of t he Feder al Rul es of Ci vi l Pr ocedur e. "

I n r e Var r asso, 37 F. 3d 760, 762 ( 1st Ci r . 1994) ( ci t i ng Fed. R.

Bankr . P. 7056) ; see al so I n r e Moul t onbor ough Hotel Gr p. , LLC, 726

F. 3d 1, 4 ( 1st Ci r . 2013) ( "The l egal st andar ds t r adi t i onal l y

appl i cabl e t o mot i ons f or summary j udgment . . . appl y wi t hout

change i n bankr upt cy pr oceedi ngs. " ) .

I n t hi s process of eval uat i ng a gr ant of summar y

j udgment , "we ar e not st r ai t j acket ed by t he [ bankr upt cy] j udge' s

r easoni ng - - qui t e t he cont r ar y, we ar e f r ee t o uphol d t he cour t ' s

or der on any basi s pr esent i n t he r ecor d. " AJ C I nt ' l , I nc. v.

Tr i pl e- S Pr opi edad, 790 F. 3d 1, 3 ( 1st Ci r . 2015) ( al t er at i ons

omi t t ed) ( ci t i ng St or / Gar d, I nc. v. St r at hmor e I ns. Co. , 717 F. 3d

242, 247 ( 1st Ci r . 2013) ) .

-11-


12/26

B. The TILA Claim

Congr ess enacted TI LA " t o assur e a meani ngf ul di scl osur e

of cr edi t t er ms so t hat t he consumer wi l l be abl e t o compare more

r eadi l y t he var i ous cr edi t t er ms avai l abl e . . . and avoi d t he

uni nf ormed use of cr edi t , and t o pr otect t he consumer agai nst

i naccur at e and unf ai r cr edi t bi l l i ng . . . . " Beach v. Ocwen Fed.

Bank, 523 U. S. 410, 412 ( 1998) ( quot i ng 15 U. S. C. 1601( a) ) . TI LA

al l ows consumer s t o obt ai n speci f i c di scl osur es on char ges, f ees,

i nt er est r at es, and t hei r r i ght s under t he l oan. I d. ( ci t i ng 15

U. S. C. 1631, 1632, 1635, 1638) . One such r i ght a consumer has

under TI LA i s t he r i ght t o r esci nd t he l oan i f t he l ender f ai l s t o

del i ver cer t ai n f or ms and t o di scl ose i mpor t ant t er ms accur at el y,

pr ovi ded t hat t he l oan i s secur ed by t he bor r ower ' s pri nci pal

dwel l i ng. See 15 U. S. C. 1635.

The par t i es agree t hat t he 2004 Tr ansact i on i s subj ect t o

TI LA. 7 Sheedy argues t hat t he TI LA di scl osur es she r ecei ved di d

not compl y wi t h Regul at i on Z because some of t he amounts di scl osed

t ur ned out t o be i naccur at e and because her husband never r ecei ved

any di scl osur es. Accordi ng t o Sheedy, t he consequence of her

husband not r ecei vi ng t hese di scl osur es i s t hat t he 2004

Tr ansact i on i s subj ect t o r esci ssi on under 15 U. S. C. 1635( a) .

7 Pur suant t o 15 U. S. C. 1633, t he Boar d of Gover nors of t heFeder al Reserve Syst em has exempt ed some cr edi t t r ansact i ons i nMassachuset t s t hat are i nst ead r egul ated under Massachuset t sGeneral Laws Chapt er 140D, 10( a) . See I n r e Smi t h- Pena, 484 B. R.512, 517 ( Bankr . D. Mass. 2013) ; 12 C. F. R. 226. 29.

-12-


13/26

Addi t i onal l y, Sheedy ar gues t hat t he Secur ed Cr edi t or s cannot avoi d

l i abi l i t y under TI LA by rel yi ng on di scl osur es gi ven as par t of t he

l oan obt ai ned when she t r ansf er r ed t he pr oper t y t o her sel f i n 2003

because, bei ng a r ef i nanci ng t r ansact i on, t he 2004 Tr ansact i on

r equi r ed addi t i onal di scl osur es beyond t he ones al r eady r ecei ved by

her i n 2003. See 12 C. F. R. 226. 20( a) ( "A r ef i nanci ng i s a new

t r ansact i on r equi r i ng new di scl osur es t o the consumer . " ) .

We concl ude, however , t hat Sheedy' s TI LA cl ai m i s t i me-

bar r ed and t her e i s no cont r over sy as t o t he appl i cabl e st at ue of

l i mi t at i ons. 8 Under TI LA, a consumer ' s

r i ght of r esci ssi on shal l expi r e t hr ee year saf t er t he date of consummat i on of t het r ansact i on or upon t he sal e of t he pr oper t y,whi chever occur s f i r st , not wi t hst andi ng t hef act t hat t he i nf or mat i on and f or ms r equi r edunder t hi s sect i on or any ot her di scl osur esr equi r ed under t hi s par t have not beendel i ver ed t o t he obl i gor . . . .

15 U. S. C. 1635( f ) ; see al so Beach, 523 U. S. at 413. I n f act , a

consumer may exer ci se t he r i ght t o r esci nd any ext ensi on of cr edi t

car r yi ng a secur i t y i nt er est over hi s pr i nci pal dwel l i ng "unt i l

mi dni ght of t he t hi r d busi ness day" af t er t he ext ensi on of cr edi t ,

af t er r ecei vi ng not i ce of t he r i ght t o r esci nd, or af t er r ecei vi ng

8 We not e t hat Sheedy' s counsel appeared t o concede at or al

ar gument t hat her TI LA cl ai m was t i me- bar r ed "as a st at ut or ycl ai m. " Never t hel ess, we exami ned i t i n an at t empt t o cl ar i f ySheedy' s ar gument s and t o avoi d conf usi on r egardi ng her st at ement st hat t he f eder al l aw cl ai ms ar e r el at ed t o t he st at e l aw cl ai ms,t hat TI LA r el i ef t hat i s t i me- bar r ed can st i l l be r equest ed i nr ecoupment , and t hat t he TI LA cl ai m " i nf or ms" her ot her st at e l awcl ai ms.

-13-


14/26

al l mat er i al di scl osur es. 12 C. F. R. 226. 15( a) ( 3) . I t i s when

t hese di scl osur es ar e not del i ver ed t hat "t he r i ght t o r esci nd

shal l expi r e 3 year s af t er t he occur r ence gi vi ng r i se t o t he r i ght

of r esci ssi on, or upon t r ansf er of al l of t he consumer ' s i nt er est

i n t he pr oper t y, or upon sal e of t he pr oper t y, whi chever occur s

f i r st . " I d. Thus, appl yi ng t he l onger t hr ee- year per i od based on

Sheedy' s asser t i on t hat her husband never r ecei ved any di scl osur es,

we agr ee wi t h t he cour t s bel ow t hat any cl ai m f or r esci ssi on under

TI LA f or l ack of di scl osures or i naccur aci es was brought mor e t han

t hr ee years af t er t he consummat i on of t he 2004 Tr ansact i on and i s

t i me- bar r ed.

Consci ous of t hi s l i mi t at i ons per i od, Sheedy next ar gues

t hat she woul d st i l l have a r i ght t o r equest r esci ssi on i n

r ecoupment by r ai si ng i t def ensi vel y under t he Massachuset t s

st at ut e. Beach r ecogni zed t hat a debt or i n a col l ect i ons act i on

has a " r i ght t o pl ead r ecoupment , a def ense ar i si ng out of some

f eat ur e of t he t r ansact i on upon whi ch t he [ credi t or ' s] . . .

act i on i s gr ounded, [ whi ch] sur vi ves t he expi r at i on of t he per i od

pr ovi ded by a st at ut e of l i mi t at i on t hat woul d ot her wi se bar t he

r ecoupment cl ai m as an i ndependent cause of act i on. " 523 U. S. at

415 ( ci t at i ons and i nt er nal quot at i on mar ks omi t t ed) . However , i n

t hi s case, because Congr ess cl ear l y i nt ended t hat any TI LA act i on

br ought out si de of t he t hr ee- year st at ut e of l i mi t at i ons be t i me-

bar r ed, t her e i s no i ndependent gr ound t o rai se t he r i ght as a

-14-


15/26

def ense i n r ecoupment . See i d. at 418 ( "We r espect Congr ess' s

mani f est i nt ent by concl udi ng t hat t he [TI LA] per mi t s no f eder al

r i ght t o r esci nd, def ensi vel y or ot her wi se, af t er t he 3- year per i od

of 1635( f ) has r un. ") .

C. The Chapter 93A Claims

Chapt er 93A pr otect s consumer s f r om "unf ai r met hods of

compet i t i on and unf ai r or decept i ve act s or pr act i ces i n t he

conduct of any t r ade or commerce . . . . " Mass. Gen. Laws ch. 93A,

2. I n or der t o pur sue a cl ai m under t hi s st at ut e, an i nj ur ed

consumer must , "[ a] t l east t hi r t y days pr i or t o t he f i l i ng of any

such acti on, [ mai l or del i ver ] a wr i t t en demand f or r el i ef . . . . "

Mass. Gen. Laws ch. 93A, 9. Fur t her more, act i ons ar i si ng under

Chapt er 93A "shal l be commenced onl y wi t hi n f our years next af t er

t he cause of act i on accrues. " Mass. Gen. Laws ch. 260, 5A; see

al so Lat son v. Pl aza Home Mor t g. , I nc. , 708 F. 3d 324, 326 ( 1st Ci r .

2013) ( "The l i mi t at i ons per i od f or chapt er 93A i s f our year s f r om

i nj ur y. " ( ci t i ng Mass. Gen. Laws ch. 260, 5A) ) .

Massachuset t s has a di scover y rul e t hat t r i gger s t he

accrual of t he cause of act i on f or pur poses of t he st at ut e of

l i mi t at i ons "when a pl ai nt i f f di scover s, or any ear l i er dat e when

she shoul d r easonabl y have di scover ed, t hat she has been har med or

may have been har med by t he def endant ' s conduct . " Epst ei n v. C. R.

Bar d, I nc. , 460 F. 3d 183, 187 ( 1st Ci r . 2006) ( quot i ng Bowen v. El i

Li l l y & Co. , 557 N. E. 2d 739, 741 ( Mass. 1990) ) .

-15-


16/26

Sheedy ar gues t hat WAMU behaved i n a way t hat was unf ai r

and decept i ve by not del i ver i ng al l r equi r ed mat er i al di scl osur es

and by mi sr epr esent i ng some of t he t erms di scl osed. She cl ai ms

t hat "[ t ] he t ot al i t y of t he ci r cumst ances sur r oundi ng t hi s

t r ansact i on f ul l y war r ant a concl usi on that Sheedy was mi sl ed i nt o

ent er i ng i nt o a r ef i nanci ng t hat was not i n her best i nt er est s

. . . . " Yet , Sheedy t el l s us t hat she knew at t he t i me of t he

2004 Transact i on t hat her husband di d not r ecei ve t he r equi r ed

di scl osur es she now cl ai ms he shoul d have r ecei ved. Moreover , she

shoul d have known i mmedi at el y upon r ecei vi ng t he l oan document s

t hat di f f er ent amount s wer e l i st ed by WAMU i n t he Tr ut h i n Lendi ng

st at ement and t he Not e i t sel f . See Lat son, 708 F. 3d at 327 ( "Her e

t he i nt er est t er ms and t he i mpl i cat i ons of t hei r bur dens wer e

apparent when t he [bor r owers] si gned and got t hei r money, a

concl usi on under scor ed by t he Massachuset t s r ul e that t he ter ms of

wr i t t en agr eement s are bi ndi ng whet her or not t hei r si gnat or i es

act ual l y read t hem. ") ( ci t i ng St . Fl eur v. WPI Cabl e Sys. / Mut r on,

879 N. E. 2d 27, 35 ( Mass. 2008) ) . Ther ef or e, any cl ai m under

Chapt er 93A i s t i me- bar r ed because Sheedy' s f our - year l i mi t at i ons

per i od began when she ent ered i nt o t he l oan i n 2004. 9

9 I nsof ar as we concl ude t hat Sheedy' s Chapt er 93A cl ai m i s t i me-bar r ed, we need not vent ur e i nt o whether her di scussi on of WAMU' sconduct i n t he Chapt er 13 pl an const i t ut ed suf f i ci ent wr i t t endemand f or r el i ef as r equi r ed by Massachuset t s General Laws Chapt er93A, 9.

-16-


17/26

D. Rescission in Recoupment

As par t of t he di scussi on of her al l eged st at e l aw

cl ai ms, i . e. , common l aw f r aud and Chapt er 93A, Sheedy al so

advances i n her br i ef t he ar gument t hat her r equest f or r esci ssi on

i n r ecoupment i s i mmune f r om any l i mi t at i ons per i od because the

equi t abl e r emedy of r ecoupment can be r ai sed def ensi vel y at any

t i me. We f i r st descr i be t hese r emedi es by not i ng t hat r ecoupment

i s f undament al l y di f f er ent f r om r esci ssi on. See I n r e O' Connel l ,

No. 1110940, 2012 WL 2685149, at *5 ( Bankr . D. Mass. J ul y 6, 2012)

( "Recoupment and r esci ssi on are [ l i ke] appl es and or anges. " ) . On

t he one hand, "[ r ] esci ssi on af f ect s a r et ur n t o t he st at us quo. "

Schwar t z v. Rose, 634 N. E. 2d 105, 109 ( Mass. 1994) . I t " i s t he

' unmaki ng' or ' voi dance' of a cont r act . " May v. SunTr ust Mor t . ,

I nc. , 7 N. E. 3d 1036, 1042 ( Mass. 2014) ( quot i ng Bl ack' s Law

Di ct i onar y 1420- 21 ( 9t h. ed. 2009) ) . Thus, i n or der t o obt ai n

r esci ssi on of a t r ansact i on, t he par t y request i ng such r emedy "must

r est or e or of f er t o r est or e al l t hat he r ecei ved under i t . "

Bel l ef eui l l e v. Medei r os, 139 N. E. 2d 413, 415 ( Mass. 1957)

( ci t at i ons omi t t ed) . On t he ot her hand, r ecoupment " al l ows a

def endant t o ' def end' agai nst a cl ai m by asser t i ng - - up t o t he

amount of t he cl ai m - - t he def endant ' s own cl ai m agai nst t he

pl ai nt i f f gr owi ng out of t he same t r ansact i on. " Bol duc v. Beal

Bank, SSB, 167 F. 3d 667, 672 ( 1st Ci r . 1999) Ther e i s no t i me

l i mi t t o r ai se recoupment as a def ense. See May, 7 N. E. 3d at 1043

-17-


18/26

( " [ T] he r i ght t o r ecoupment cont ai ns no t i me l i mi t at i ons on

asser t i on of t he r i ght . Thi s accor ds wi t h t he common- l aw

under st andi ng of r ecoupment as a def ensi ve mechani sm wher eby a

def endant may, at any t i me, asser t cl ai ms agai nst t he pl ai nt i f f i n

r educt i on of t he pl ai nt i f f ' s cl ai ms when t hose cl ai ms ar i se out of

t he same t r ansact i on; i t i s an of f set t i ng of l i abi l i t i es wi t hi n a

t r ansact i on. " ( al t er at i on omi t t ed) ( ci t i ng Bose Cor p. v. Consumer s

Uni on of U. S. , I nc. , 326 N. E. 2d 8 ( Mass. 1975) ) ) ; see al so Bul l v.

Uni t ed St ates, 295 U. S. 247, 262 ( 1935) ( expl ai ni ng t hat r ecoupment

i s al l owed " i n t he nat ur e of a def ense ar i si ng out of some f eat ur e

of t he t r ansact i on upon whi ch t he pl ai nt i f f ' s act i on i s gr ounded

[ and t hat i t ] i s never bar r ed by t he st at ut e of l i mi t at i ons so l ong

as t he mai n act i on i t sel f i s t i mel y") .

I n t he i nst ant case, t hi s means t hat i f Sheedy i s gr ant ed

t he r equest ed r el i ef of r esci ssi on i n r ecoupment , she woul d be

al l owed t o avoi d t he Secur ed Cr edi t or ' s f or ecl osur e act i on by

r evi vi ng her own cl ai m ar i si ng under t he 2004 Tr ansact i on. That

woul d r esul t i n r esci ssi on bei ng a "set of f " agai nst f or ecl osur e.

Yet , i n r ecoupment , t here i s a di f f er ence between a def endant

obt ai ni ng damages caused by a pl ai nt i f f and t he def endant obt ai ni ng

r esci ssi on of a mor t gage- secur ed obl i gat i on owed t o t he pl ai nt i f f .

See Beach, 523 U. S. at 411 ( "Si nce a st at ut or y resci ssi on r i ght

coul d cl oud a bank' s t i t l e on f or ecl osur e, Congr ess may wel l have

chosen t o ci r cumscr i be t hat r i sk, whi l e per mi t t i ng r ecoupment of

-18-


19/26

damages r egardl ess of t he dat e a col l ect i on act i on may be

br ought . " ) ; see al so May, 7 N. E. 3d at 1042. Thus, t he quest i on

becomes whet her r esci ssi on i s avai l abl e t o Sheedy i n recoupment .

Under Massachuset t s common l aw, " r ecoupment and

r esci ssi on wer e consi st ent l y t r eat ed as separ at e, nonover l appi ng

r emedi es [ , ] . . . as [ t hese] ar e i nconsi st ent r emedi es, a per son

who has once el ect ed t o pur sue one of t hem cannot af t erwards seek

t he ot her . " May, 7 N. E. 3d at 1042 ( al t er at i ons omi t t ed) ( ci t at i ons

and i nt er nal quot at i on mar ks omi t t ed) . Despi t e t hi s appar ent

pr ecl usi on of r esci ssi on i n r ecoupment , Sheedy ar gues t hat t he

Supr eme J udi ci al Cour t ' s deci si on i n May does not i mpede her f r om

obt ai ni ng such r el i ef . I n t hat case, debt or s i n a posi t i on

equi val ent t o Sheedy' s f i l ed an adver sary pr oceedi ng agai nst a

cr edi t or , al so wi t hi n a Chapt er 13 bankrupt cy case, seeki ng

r esci ssi on of a home- r ef i nanci ng l oan t r ansact i on. The st at ut e at

i ssue i n May, however , was not Chapt er 93A. I nst ead, i t was t he

Massachuset t s Consumer Cr edi t Cost Di scl osure Act ( "MCCCDA") , Mass.

Gen. Laws ch. 140D, 1- 35, t he TI LA- equi val ent st at e st at ut e t hat

"gover ns t he r i ght s and dut i es of cr edi t or s and obl i gor s ( bor r ower s

or consumer s) engaged i n consumer cr edi t t r ansact i ons . . .

[ i ncl udi ng] t he r ef i nanci ng of a consumer ' s home where the consumer

gr ant s a mor t gage t o the cr edi t or t o secur e t he r ef i nanci ng l oan. "

May, 7 N. E. 3d at 1037. The Supr eme J udi ci al Cour t concl uded t hat

r esci ssi on i s not a r emedy i n r ecoupment f or vi ol at i ons of t he

-19-


20/26

MCCCDA, i n par t because under t he "common- l aw[ , ] r ecoupment does

not i ncl ude t he use of r esci ssi on as a f or mof r ecoupment . " I d. at

1043.

Sheedy' s at t empt s t o di st i ngui sh May f r om t he pr esent

case ar e f r ui t l ess. Poi nt i ng t o no suppor t i ng sour ce, Sheedy asks

us t o concl ude t hat , whi l e Massachuset t s l aw does not al l ow

r esci ss i on i n r ecoupment i n cl ai ms ar i si ng under t he MCCCDA, t he

l egi sl at i ve i nt ent can easi l y be avoi ded by any def endant r ai si ng

an i dent i cal cl ai m as a "Chapt er 93A cl ai m. " That i s, wi t hout

expl anat i on, Chapt er 93A per mi t s a def endant t o revi ve i n

r ecoupment what t he l egi sl at ur e expr essl y want ed f orecl osed by the

st at ut e of l i mi t at i ons under t he st at ut e i nt ended t o pr ot ect such

bor r ower . We are unper suaded. Even t he May cour t ' s st at ement of

t he quest i on bef or e i t di r ect l y addr esses and f or ecl oses t he i ssue

i n the i nst ant case: whether any " l aws of t he Commonweal t h

per t ai ni ng t o recoupment pr ovi ded f or or r ecogni ze resci ssi on as a

f or m of r ecoupment , at l east wher e r esci ssi on i s used def ensi vel y

t o meet an obl i gat i on due. " I d. at 1041. I n answer i ng t hi s

quest i on i n the negat i ve, t he Supr eme J udi ci al Cour t emphasi zed

t hat a borr ower coul d seek resci ssi on - - wher e al l owed - - but not

i n r ecoupment . I d. at 1043 ( " [ R] ecoupment and r esci ssi on are

separ at e, and common- l aw r ecoupment does not i ncl ude t he use of

r esci ssi on as a f or mof r ecoupment . " ) . Fur t her mor e, May r ecogni zes

t hat i t i s possi bl e f or a f ut ur e pl ai nt i f f t o have a def ensi ve

-20-


21/26

cl ai m f or damages under Chapt er 93A t hat coul d be r ai sed i n

r ecoupment , but not a cl ai m f or r esci ssi on. I d. at 1044 n. 17

( "Her e, however , because t he pl ai nt i f f s' cl ai mal l egi ng a vi ol at i on

of G. L. c. 93A i s t i ed t o t hei r asser t ed r i ght t o r esci ssi on, whi ch

does not exi st , t hei r c. 93A cl ai m cur r ent l y does not appear t o

of f er r el i ef . " ) .

Sheedy onl y of f er s one ar gument t o di f f er ent i at e her case

f r om May, st at i ng t hat si nce "Sheedy i s pr oceedi ng under t he

f eder al st at ut e, [ May] does not cont r ol si nce i t appl i es onl y t o

t he [ TI LA- equi val ent ] st at e st at ut e. " Thi s ar gument cont r adi ct s

another st atement i n Sheedy' s br i ef t hat t he r eason we shoul d

i gnor e t he st at ut e of l i mi t at i ons appl i cabl e t o her TI LA cl ai m i n

t he f i r st pl ace i s t hat a pl ai nt i f f may pr eser ve "a r i ght of

r esci ssi on under Chapt er 93A of t he Massachuset t s Gener al Laws. "

Moreover , i n her compl ai nt , Sheedy' s sol e r emedy request under

Chapt er 93A was f or r esci ssi on. Thus, we concl ude t hat , i nasmuch

as May does not al l ow r esci ssi on i n r ecoupment under t he MCCCDAA,

and r esci ssi on i n r ecoupment i s not al l owed pur suant t o

Massachuset t s common l aw, Sheedy has not advanced anyt hi ng t o

suppor t t hat - - based on t he same f act s - - a def endant may

ci r cumscr i be t he st at ut es t o revi ve such a cl ai m t hr ough Chapt er

93A. Consequent l y, Sheedy may not asser t a cl ai mf or r esci ssi on i n

r ecoupment under Chapt er 93A.

-21-


22/26

E. The Fraud, Deceit, and Misrepresentation Claim

Sheedy ar gues t hat t he "f or ensi c audi t r epor t " obt ai ned

f r om MFI - Mi ami f ound t hat t he t er ms of t he Tr ut h i n Lendi ng

st at ement cont r adi ct t he terms of t he l oan because t he payment due

on t he si xt y- f i r st mont h t ur ned out t o be $4, 055. 05, i nst ead of t he

$4, 331. 58 t hat WAMU di scl osed t o her . Thus, because she was

not i f i ed when she ent er ed i nt o t he l oan t hat she woul d have t o pay

a hi gher amount t han what she ended up havi ng t o pay, she was

necessar i l y decei ved. Another such exampl e of cl ai med decei t and

mi sr epr esent at i on i s t he f act t hat t he Not e st at ed t hat she woul d

have t o pay $4, 109. 56 per mont h f or t he f i r st si xt y mont hs, but she

was onl y r equi r ed t o pay $2, 446. 88 each of t hese mont hs.

Accordi ngl y, Sheedy st r esses t hat WAMU i nduced her i nt o ent er i ng a

l oan wi t h f al se and mi sl eadi ng i nf or mat i on.

As a pr el i mi nar y obser vat i on, whi l e i t may be a vi ol at i on

of f eder al and st at e l aws and regul at i ons i n some ci r cumst ances,

Sheedy does not expl ai n how t el l i ng a bor r ower t hat she wi l l be

r esponsi bl e f or a hi gher amount t han what i s act ual l y demanded of

her f r audul ent l y i nduces such a bor r ower i nt o ent er i ng a l oan t hat

she woul d not have ot her wi se execut ed. 10 I n any event , Sheedy' s

argument i s mi sl eadi ng because the amount act ual l y pai d by her

10 We do not r ul e out t hat some bor r owers may be def r auded byent er i ng i nt o cont r act s t hat demand hi gher payment s t han what areact ual l y r equi r ed of t hem, e. g. , when a bor r ower expect s l owerover al l i nt er est expense based on hi gher payment s up- f r ont .

-22-


23/26

dur i ng t he i ni t i al si xty- mont h per i od was based on t he addendum t o

t he Note and not on what t he Note i t sel f pr ovi ded.

To successf ul l y pur sue a f r aud cl ai munder Massachuset t s

l aw, Sheedy had t o est abl i sh t hat " ( 1) [ WAMU] made a f al se

r epr esent at i on wi t h knowl edge of i t s f al si t y f or t he pur pose of

i nduci ng pl ai nt i f f s t o act t her eon; ( 2) t hat [ Sheedy] r el i ed upon

t he r epr esent at i on as t r ue and act ed upon i t t o [ her ] det r i ment ;

and ( 3) t hat [ her ] r el i ance was r easonabl e under t he

ci r cumst ances. " FAMM St eel , I nc. v. Sover ei gn Bank, 571 F. 3d 93,

105- 106 ( 1st Ci r . 2009) ( ci t i ng Rodi v. S. New Eng. Sch. of Law,

532 F. 3d 11, 15 ( 1st Ci r . 2008) ) .

We t ake t hese el ement s i n t hat order , begi nni ng wi t h t he

knowl edge el ement . Because Sheedy does not ar gue t hat WAMU had

knowl edge of t he f al si t y of t he i nf or mat i on, we assume t hat she

i mpl i es t hat i t shoul d have been apparent t o WAMU t hat t he Not e and

t he Tr ut h i n Lendi ng st at ement cont ai ned di f f er ent i nf or mat i on, and

t hat one of t he number s was wr ong. However , absent more det ai l ed

evi dence, i t i s not obvi ous t hat a payment amount pr ovi ded i n t he

di scl osur e i s decept i ve when t he i nt er est r at e i s var i abl e - - by

i t s own t er ms t he payment amount wi l l be t he resul t of appl yi ng t he

i nt er est f or mul a at a f ut ur e t i me. See 12 C. F. R. 226. 18( f )

( l i st i ng t he r equi r ed di scl osur es f or var i abl e r at e) . Even

assumi ng t hat t he var i abl e payment amounts coul d be predi ct ed and

t hat WAMU shoul d have had knowl edge t hat t he amounts di scl osed i n

-23-


24/26

t he t wo document s wer e di f f er ent , Sheedy st i l l f ai l ed t o est abl i sh

t he r emai ni ng el ement s.

Sheedy' s ar gument s al so f ai l when i t comes t o t he

r el i ance el ement . She f i r st r ecogni zes t hat t he det ai l s di scl osed

by WAMU were cont r adi ct or y and t hat "any r easonabl e person woul d be

conf used by thi s di screpancy[ , ] " yet she cl ai ms t hat she st i l l

r el i ed on t he hi gher payment amount s r epr esent ed by WAMU and act ed

upon t hem t o her det r i ment . Sheedy does not argue t hat t hi s

r esul t ed i n any speci f i c har m. I nst ead, she si mpl y asks that we

f i nd qui t e i r r at i onal l y t hat she was har med by the al l eged f r aud

based on t he f act t hat she was l ater r equi r ed t o make l ower

payment s.

Fi nal l y, Sheedy does not est abl i sh how her r el i ance on

"conf usi ng" and "cont r adi ct or y" di scl osur es was r easonabl e under

t he ci r cumst ances, especi al l y i n l i ght of t he f act s t hat she had

been i n t he r eal est at e i ndust r y and had a r eal est at e br oker

l i cense si nce t he ear l y 1980s. See Yor ke v. Tayl or , 124 N. E. 2d

912, 916 ( Mass. 1955) ( not i ng rel i ance cannot be deemed r easonabl e

when al l eged mi sr epr esent at i on i s "pal pabl y f al se" ) . 11

11 Because we concl ude t hat Sheedy' s al l egat i ons on appeal arei nsuf f i ci ent t o est abl i sh her under l yi ng f r aud cl ai m, we need notexami ne the ef f ect s of t he MFI - Mi ami r epor t ' s excl usi on or t heSecur ed Cr edi t ors ar gument s t hat any l i abi l i t y by WAMU was r et ai nedby t he FDI C.

-24-


25/26

F. The Objection to the Secured Claim

Sheedy present s on appeal a shor t concl usor y ar gument

t hat t he Secur ed Cr edi t or s di d not expl ai n why t hei r cl ai m f or

cost s and at t or ney f ees i s " r easonabl e and necessar y, " and t hus t he

cl ai m shoul d be di sal l owed. Addi t i onal l y, ci t i ng t o I n r e Pl ant ,

288 B. R. 635 ( Bankr . D. Mass 2003) , wi t hout any ef f or t t o devel op

an argument , Sheedy st at es si mpl y that t he Secur ed Cl ai m does not

compl y wi t h t he cour t ' s rul e f or al l owi ng at t or ney f ees. Sheedy

does not st ate what t hose r ul es are. 12 We t hi nk t hi s i s not hi ng

mor e than a skel et al pr esent at i on of t he ar gument ; i t i s t hus

wai ved. 13 See Mat t v. HSBC Bank USA, N. A. , 783 F. 3d 368, 373 ( 1st

Ci r . 2015) ( "These i ssues are st at ed ' i n t he most skel et al way,

l eavi ng t he cour t t o do counsel ' s wor k, cr eat e t he ossatur e f or t he

ar gument , and put f l esh on i t s bones. ' " ( quot i ng Zanni no, 895 F. 2d

at 17) ) .

G. Deutsche Bank's Standing as Sheedy's Creditor

I n essence, Sheedy' s st andi ng chal l enge i s t hat Deut sche

Bank cannot enf orce t he Mor t gage agai nst her because i t was

12 I n r e Pl ant i ncl udes a det ai l ed expl anat i on of t he appl i cabi l i t yof Federal Rul e of Bankr upt cy Procedur e 2016 and Massachuset t sLocal Bankr upt cy Rul e 2016- 1. 288 B. R. at 663- 64. Those r ul es i n

t ur n l i st a number of r equi r ement s f or appl i cat i ons f orcompensat i on and f ees agai nst t he est at e. Sheedy does not expl ai nhow t hese were not f ol l owed.

13 The di st r i ct cour t f ound t he Secur ed Cr edi t or s had pr esent ed anaf f i davi t wi t h suf f i ci ent i nf or mat i on f or Sheedy t o expl ai n whather obj ect i on was.

-25-


26/26

t r ansf er r ed i nt o t he Secur i t i zed Tr ust i n vi ol at i on of t he PSA, si x

year s af t er t he t r ust was cr eat ed. However , i t i s Sheedy who l acks

st andi ng t o chal l enge Deut sche Bank' s cl ai m agai nst her on t hi s

gr ound. Sheedy cannot quest i on Deut sche Bank' s st at us as her

cr edi t or unl ess she "chal l enge[ s] a mor t gage assi gnment as i nval i d,

i nef f ect i ve, or voi d[ , ] " r at her t han as an assi gnment t hat i s onl y

"voi dabl e. " Cul hane v. Aur or a Loan Ser vi ces of Nebr aska, 708 F. 3d

282, 291 ( 1st Ci r . 2013) . Yet a val i d chal l enge f or vi ol at i ons of

t he t er ms of a PSA woul d r esul t i n t he assi gnment bei ng voi dabl e

and not voi d. But l er v. Deut sche Bank Tr . Co. Amer i cas, 748 F. 3d

28, 37 ( 1st Ci r . 2014) ( "Under Massachuset t s l aw, i t i s cl ear t hat

cl ai ms al l egi ng di sr egar d of a t r ust ' s PSA ar e consi der ed voi dabl e,

not voi d. ") .

III. Conclusion

For t he f or egoi ng r easons, we af f i r mt he gr ant of summar y

j udgment i n f avor of t he Secured Cr edi t or s.

Affirmed.

-26-

sheedy v. deutsche bank national trust c, 1st cir. (2015)

Documents