Last year, in Bank of New York v. Bailey, 460 Mass. 327 (2011), the Supreme Judicial Court (the “SJC”) ruled that a Housing Court judge presiding over an eviction matter could hear a post-foreclosure mortgagor’s claim that the foreclosure sale allegedly divesting him of title was defective – and thus, he should not be ousted from the property. The Bailey decision’s impact will likely be felt in not only in summary process sessions, however, but also in other fora where summary process decisions are likely to be given preclusive effect.
In deciding Bailey, the Court held that “challenging a plaintiff’s entitlement to possession has long been considered a valid defense to a summary process action for eviction where the property was purchased at foreclosure sale.” Bailey, 460 Mass. at 333. Additionally, the Court wrote:
In a summary process action for possession after foreclosure by sale, the plaintiff is required to make a prima facie showing that it obtained a deed to the property at issue and that the deed and affidavit of sale, showing compliance with statutory foreclosure requirements, were recorded.
Id. at 334.
The SJC’s key pronouncements that (i) a title challenge based on a defect in foreclosure practice has always been available to a former mortgagor in an eviction action; and (ii) a post-foreclosure owner seeking possession is required to show that the foreclosure was effective, set up an important corollary to Bailey’s primary holding. That is, a former mortgagor who loses a summary process case will be barred from later litigating the propriety of the foreclosure in some other forum.
To date, at least two courts have invoked Bailey to hold that a prior summary process action had preclusive effect.
In Solomont v. Howe Real Estate Advisors, LLC, 2011 WL 4483960 (Mass. Land Court 2011), Justice Gordon H. Piper of the Land Court wrote: “The determination of title in a prior proceeding will, in appropriate cases, bar a new litigation attempt to adjudicate title again a fresh action. . . . Indeed, the strong interest in certainty of title to land makes invocation of res judicata especially worthwhile to prevent multiple attacks on title in sequential litigation.” 2011 WL 4483960, *8. Accordingly, in Solomont, the Court held “the Plaintiffs’ claim to quiet title in themselves is barred because the current parties are the same as, or in privity with, those who were parties to the prior Summary Process action.” Id.
Less than six months later, in Wenzel v. Sand Canyon Corp., 2012 WL 219371 (D. Mass.), a United States Magistrate Judge relied on Bailey and Solomont to find that a prior Housing Court judgment for possession barred post-foreclosure claims for declaratory judgment and to quiet title brought in Superior Court and removed to the U.S. District Court on diversity grounds. See Wenzel, 2012 WL 219371 at **11-14.
The take-away for defense counsel facing quiet title or similar actions brought by foreclosed-upon mortgagors in Superior Court: Check to see if a judgment for possession has entered in a post-foreclosure eviction action. If so, such a judgment could short-circuit the claim.
To see author Jennifer E. Greaney’s biography or to find her contact information, click here.