SJC-10880 06 Amicus Levitin Brief w

8/7/2019 SJC-10880 06 Amicus Levitin Brief w

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C O M M O N W E A LT HOF M A S S A C H U S E T T SA P P E A L S C O U RT

S.J.C. NO. 10880

A.C. NO. 2010-P-1912

F R A N C I S 3. BEVILACQUA, 111

Pe t i t ione r-Appe l l an t

V.

PABLO R O D R I G U E Z

Responden t -Appe l l ee

ON APPEAL FROM MASSACHUSETTS LAND COURTCIVIL A C T I O N NO, 10 M I S C 4 2 7 1 5 7

AMICUS C U R I A E BRIEF OFPROFESSORS ADAM J . L E V I T I N , C H R I S T O P H E R L . P ETE R S ON ,

KATHERINE PORTER, 5 JOHN A . E . POTTOW

A d a m J. L e v i t i nA s s o c i a t e P r o f e s s o r of L a wGeorge town Unive r s i ty Law Cente r600 New Je r sey Ave ., N WWashing ton , DC 20001

a [email protected]( 2 0 2 ) 6 6 2 - 9 2 3 4

C h r i s t o p h e r L. P e t e r s o n

A s s o c i a t e D e a n for Academic Affa i r sP r o f e s s o r of L a wUniver s i ty o f UtahS . J . Quinney Col l ege of La w3 32 South 1400 East, R o o m 1 01salt Lake C i t y, UT 84112-0730(801)581-6655c [email protected]

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K a t h e r i n e P o r t e rRobert Braucher Visiting ProfessorHarvard Law SchoolP r o f e s s o r of Law

University of Iowa C o l l e g e of Law1575 Massachuse t t s Ave.C a m b r id g e , M A 02138

k [email protected](6 17 ) 496-6710

John A.E. PottowP r o f e s s o r of L a wUniversity of Michigan School of Law625 Sou th S ta te S t ree tA n n Arbor, M I 48109-1215

p [email protected] (7 34 ) 647-3736

Apr i l 17, 2011

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Table o f Contents

I Statement of Interest of Amicus Curiae ........... 5 I 1 Statement of the Issue ........................... 5I 11 Argument ....................................... 6

A. The Principle of Nemo Dat Must Preva il Over TheRights of a Good Faith Purchaser ................... 6B . The Recording of a Deed Is a Minister ial Act thatCannot Create Title ................................ 8C . Enabling the Laundering of Bad Title to GoodTitle Via Try Title Actions Would Eviscera te This

Court's Ruling in Ibanez and Would EncourageF rivolous and Inequitable Litigation .............. 10I V. Conclusion ...................................... 13

Ta b l e of Author i t i e s

Cases

Barnard v . Norwich & W.R. Co .2 F Cas . 841. 845 (Cir Ct . D . Mass . 1876) ........ 7United States Bank Nat'l Ass' n v Ibanez4 5 8 Mass . 6 3 7 (Mass ZOll).... . . . . . . . . . . . . . . 8 . 10. 1 3

Sta tu tes

M.G.L. c . 106 9-610(a) ........................... 10M.G.L. c 183 8 2 ................................... 8M.G.L. C . 183 4-58 ................................ 9M.G.L. c . 185 S S 6 , 10, 6 8 ........................... 9M.G.L. C . 240. $ 5 1-5 .......................... 5 . 8. 9 www.S

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M . M . G . L . c. 240, SS 6-10.,...........................9

O t h e r A u t h o r i t i e s

JOHN . DoLAN ET AL., CORE CONCEPTS OF COMMERCIAL LAW: PA S T,PRESENT, ND FUTURE: CASES A N D MATERIALS 2 ( T h o m p s o n West ,2 0 0 4 ) ................................................ 6william Warren , C u t t i n g Off Claims of Ownership Undert h e U n i f o r m Commercial Code3 0 IJ. C H I . L. REV. 469, 4 70 ( 1 9 6 3 ) .................... 7

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I. Sta tement of Interes t o f Amicus Curiae

we are professors of law at Georgetown University

Law Center in Washington, D.C., Harvard Law Schoo l in

Cambridge , Massachusetts, the University of Utah S.J.

Quinney College of L aw in Salt Lake Cit y, Utah, and

the University of Michigan School of Law in Ann Arbor,

Michigan. We teach courses in commercia l law,

contracts, structured finance, consumer law and

finance, and bankruptcy. We have written extensively

on mortgage servicing and testified before Congress

repeatedly on problems in the foreclosure process. we

have no affiliati on with any party in this case and

have had no contact with any party to the case. we

write to the Court as a m i c i concerned with the case's

implications for commercial law and the foreclosure

process and urge the a ffirmation of the Land Court's

opinion.

11. Statement of the Issue

Whether a Land Court judge correctly dismissed a

petition under M.G.L. c. 240, 1, to "try title",

where the plaintiff held a quitclaim deed conveyed

after an invalid foreclosure sale of the property by

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U.S. Bank National Association, which did not hold the

mortgage at the time of the sale.

III. Argument

A. The Principle of Nemo D a t Must Prevail Over Th e

R i g h t s of a Good F a i t h Purchaser

This case presents an unusually stark contest

between two o f the most fundamental principles of

commercia l law: the principle of nemo d a t and the

principle o f the bona f i d e purchase. The principle of

nemo dat quod non habet-that you can't give what you

don't have-is the bedrock principle on which all

commercia l law is built. S e e , e.g., JOHN , DoLAN ET A L . ,

CORE CONCEPTS F COMMERCIAL AW: PAST, RESENT, ND FUTURE:

CASES AN D MATERIALS 2 (Thompson West, 2004) ("The First

Rule of Conveyancing-Nemo oat"),

Nemo d a t means that a s ale of the John Adams

Courthouse is ineffective, unless the seller holds

title to the Courthouse. So too, under the nemo d a t

principle, one cannot convey good title to a

neighbor's house in a sale. As the Circuit Court fo r

the District of Massachusetts noted 135 years ago, "No

person can sell a thing he does not own, unless as the

duly authorized agent of the owner. NemO d a t quod non

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habet." Barnard v . Norwich & W.R. Co., 2 F. Cas. 841,

845 (Cir. Ct . D. Mass. 1876).

The bona f i d e purchaser principle protects

parties who take for value in good faith. I n this

case, i t is not cle ar whether Mr, Bevilacqua was a

good faith purchaser; no finding of fact was made in

th is regard.'

For the purposes o f this amicus curiae brief,

however, it is irrelevant whether Mr. Bevklacqua was a

good faith purchaser, as the nemo d a t doctrine trumps

the bond fide purchase doctrine. It is well-

established, black letter law that the "good fai th

purchaser from a thief or a mere bailee took subject

to claims of ownership". W i l l i a m warren, Cutting Off

Claims of Ownership Under the Uniform Commercial Code,

3 0 U. CHI. L. REV. 469, 470 (1963). This case f i ts

squarely within that description.

There is no contention in this case that U.S.

Bank, N . A . , the trustee of the se curitization trust

' Leaving asi de the possibility of actual knowledge oft i t le defects , i t is questionable whether, as a mattero f law, a purchaser of a quitclaim deed at anonjudicial foreclosure sale can ever be a good faithpurchaser. Nonjudicial foreclosure sales are subjectto legal requirements beyond those of regular privatesales , and absent due diligenc e, a foreclosure salepurchaser cannot be sure that the sal e complied withthe law and therefore was ca pable of passing goodtitle.www.S

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that claimed to hold the Rodriguez note and associated

security instrument did not properly forecl ose on the

Rodriguez property. U . S . Bank, N,A. fai led to show

that i t was the mortgagee, just as i t did in United

States Bank Na t ' l Ass 'n v. Ibanez, 458 Mass. 6 3 7

(Ma SS. 2011). Accor dingl y, U.S. Ban k, N.A., was no

more capable of passing on good title to the Rodriguez

property th an a c ommo n thief.2

B . The Recordfng of a Deed Is a Ministerial A c t that

Cannot Create T i t l e

Mr. Bevilacqua argues that the filing of a

recorded quitclaim deed gives him record title to the

property and therefore the ability to petition to try

title under M.G.L. c. 240, SS 1-5. Mr. Bevilacqua's

argument places to o much importance on the existence

of a recorded deed. There is nothing magical about a

*

quit claim de ed , M.G.L. c . 183 2 provides that "A deedo f quitclaim and release shall be sufficient to convey

all the estate which could lawfully be conveyed by adeed of bargain and sale." In other words, aquitclaim deed, such as the one conveyed from U . S .Bank, N . A . to Mr. Bevilacqua at the nonjudicialforeclosure sale could only convey such title as U.S.Bank , N.A. could have conveyed thro ugh a regular deedof sale. Th us , if U.S. Bank , N.A. lack ed th e abil ityto convey through a r egular deed of sale, i t alsolacked ability to convey through a quitclaim deed.

Thi s concl usion is not altered by the use of a

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deed , however. The recording of a deed does not make

a deed valid. Recording is a ministeri al rather than

an adjudicative function. See M.G.L. c. 1 8 3 4-58;

M.G.L. C. 185 5 5 6, 10, 68.

Thus, Professor Levitin could type up a quitclaim

deed on his computer and convey Fenway Park to

Professor Pottow, which Professor Pottow could then

reco rd, making him the "record title holder." All a

recorded title does is provide notice to third parties

of a possible claim to a property: it does not confer

ownership.

According ly, Mr. Bevilacqua's argument simply

proves too much. By its logic, Professor Pottow could

record the quitclaim deed to Fenway Park from

Professor Levitin and then use that recorded deed as

the basis for bringing a "try title'' peti tion under

M.G.L. c. 240 5 1. By his l ogic, if the Boston Red

Sox failed to answer h i s petition, for whatever

reason, he could take title to Fenway Park. The

effect would be t o short circuit the adverse

possession provisions of the Massachusetts General

Law s, M.G.L, c. 240 SS 6-10, and enable Professor

Pottow (in connivance with Professor Levitin) to use

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the courts to e -- x ti ve ly steal Fenway Park.'

Interpret ing the la w as Mr. Bevilacqua would have it

would permit "try title" plaintiffs to crea te good

legal title out o f thin air.

C . E n a b l i n g th e L a u n d e r i n g of Bad T i t l e t o Good T i t l e

V i a Try T i t l e Actions Would Eviscerate T h i s Court's

R u l i n g i n I b a n e e a n d Wo u ld E n c o u r a g e F r i v o l o u s and

Xnequ i t ab l e L i t i ga t i on

Adopting Mr. Bevilacqua's position would a lso

seriously undermine this Court's recent ruling in

Ibanez, 458 Mass. 637. If the purchaser o f a property

at an invalid foreclosure sale can conjure up good

title through a "try title" petition, it will make the

strictures o f Ibanez meaningle ss by permitting

financial institutions and foreclosure sale purchasers

to "launder" title through invalid foreclosures and

try title petitions.' The "try title" statute is meant

Mr. Bevilacqua's position would similarly mean that weprofessors could engage in a self-help repossessionsof the cars of every Justice on the Supreme JudicialCourt and then sell them in a commercially reasonable

manner, pursuant to M.G.L. c. 106 5 9-610(a)(Massachusetts version of the Uniform Commercial Co de)and thereby pass good title to the cars to theirpurchasers. Such a result would be patentlyridiculous.4 1 n this case, Mr. Bevilacqua knowingly bought into theclouded title via a quitclaim deed at a nonjudicialforeclosu re sale , and presumably purchased at a steepwww.S

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e use4 !fens rely, as a E ? , not o fens .Y

as a sword to deprive others of thei r property.

Indeed, the concern about "try title" petitions

being used offensively is also a concern for

mortgagees. If anyone can record a deed and bring a

try title action and win by mere default, it creates

an incentive for legitimately foreclosed homeowners to

file try title actions after foreclosure and hop that

the foreclosure sale purchaser (frequent ly the

foreclosing mortgagee ) will fail to answer the

petition for whatever reaso n, resulting in the

homeowner getting his or her house back, Opening up

try title to those without a colorable claim could

flood the courts with actions.

There is also a particular equity concern that

arises if "try title" actions are used in an attempt

to kosher otherwise illegitimate foreclosures.

Defending against a "try title" action creates a

particular burden for homeowners who are in default on

their mortgages, but where a proper foreclosure has

not yet taken place. These homeowners still have

title to their home until a proper fo reclosure is

discount from the price in a normal arms-length sale.U.S. Bank, N.A., received the proceeds of the sale inexchange for transferring dubious title.www.S

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c mF ?ked. Often, Dwever , t :Y ick t 3 fun' to

effectively defend against a "try title" petition.

Permitting "try title" petitions via invalid

foreclosure sales would have the effe ct of permitting

indirectly what is fo rbidden directly-the deprivat ion

of a homeowner's property without proper procedure.

It is particularly troubling if this could be done

solely because the homeowner lacks the funds to defend

his or her title. Homeowners in default on their

mortgages are among the most vulnerable of populations

and shou ld be protected from costly and vexatious

litigation such as "try title" petitions by

opportun istic foreclosure sale purchasers.

The Land Court sensibly interpreted the "try

title" provision to apply only to colorable claims to

title, not to the recording of quitclaim deeds from

faulty foreclosures.' Affirmation of the Land Court

might chil l the market in foreclosure sales in

Massachusetts.6 But reversal would have a far more

At wors t, the Land Court "jumped the gun" by ruling

on standing rather than by formally trying title. Itis possible, however , to read the Land Court's rulingon standing as being the actual trying of title,Moreover , in light of th is Court' ruling in Ibanez,458 Mass. 637, Mr, Bevilacqua cannot prevail in aformal trial of title.'Affirmation might a lso have the salutary effect ofencouraging lenders t o attempt negotiated

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deleterious impact on the legal and economic system,

as parties' confidence i n their tenure in their

property would be impaired. Whatever the effect on the

Massachusetts foreclosure sale market, affirmation of

the Land Court's opinion i s essential in order to

avoid doing serious harm to the fund amental principles

of commercial law and from undermining the Court's

recent ruling in I banez, 458 Mass. 6 3 7 .

Iv. Conclusion

For the reasons set f o r above, the judgment of the

Land Court dismissing Mf. Bevilacqua's action, dated

A u g u s t 26, 2010, should be affirmed.

Respectfully submitted,

Associate Professor of LawGeorgetown University Law Center6 0 0

New J erse y Ave., NwWashington, DC 20001

adam.~ L e v i tine law. ~?g>i"~ke,wn. cdu( 2 0 2 ) 662-9234

restructurings of defaulted mortgages instead o fproceeding to foreclosure.

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Bssocia te Dean or Academic AffairsProfessor of LawUniversi ty o f UtahS.J. Quinney College of L a w332 South 1400 East, Room 101Salt Lake City, UT 84112-0730

Chr is topher. p e t e r s o n @ aw.utah.edu(801)581-6655

Robdrt Braucher Vis i t ing ProfessorHarvard Law SchoolProfessor of LawUniversi ty of Iowa College of Law1575 Massachuset ts Ave.Cambridge, M A 02138

k atie-portereuiowa.edu(61 7) 496-6710

ProfessVor of Lawuniversi ty of Mich igan School o f Law625 South S ta te S t ree tAnn Axbor, MI 48109-1215( 7 3 4 ) 647-3736pot t w@ mic h . du

Dated Apri l u, 011

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http://law.utah.edu/http://law.utah.edu/http://katie-portereuiowa.edu/http://katie-portereuiowa.edu/http://law.utah.edu/

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SJC-10880 06 Amicus Levitin Brief w

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