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SJC announces another defense against claims for possession

May 24, 2016

petervickery

May 24, 2015:- Today the Supreme Judicial Court (SJC) sent back to the Housing Court a summary process case that started almost four years ago in August 2012. In its decision (in favor of the tenants) the SJC points out the need to promote “the legislative goal of just, speedy, and inexpensive resolution of summary process cases.” But it is not only connoisseurs of irony who will find the decision noteworthy. Although the case concerns an attempted post-foreclosure eviction, it refers to yet another defense against claims for possession (a defense, as opposed to a mere counterclaim) that may have an impact on the more run-of-the-mill landlord-tenant cases as well.

In May 2012, a mortgage company recorded the foreclosure deed  for home of Edward and Emanuela Rego. At the foreclosure sale, the Federal National Mortgage Association (Fannie Mae) took title. In August it started a summary process action in Housing Court to evict the Regos. In October 2012, the Regos filed their Answer, replete with 25 affirmative defenses and one counterclaim alleging that the mortgage company had violated the Consumer Protection Act, G.L. c. 93A.  According to the Regos’ counterclaim, the company had violated 93A by charging excessive late fees and sending deceptive notices about their eligibility for loan modifications.

Fannie Mae filed a motion for summary judgment in February 2014, almost two years after it had purchased the house. The Housing Court awarded it possession and dismissed the Regos’ counterclaim. In July 2014, the Housing Court entered final judgment in favor of Fannie Mae. But the judge did not expressly state whether he agreed with Fannie Mae’s argument that because he had awarded possession he now lacked jurisdiction to decide the 93A counterclaim. The judge scheduled a separate hearing this particular question, and dismissed the 93A counterclaim, but did not state why. This bit is important, by the way.

When Fannie Mae prevailed on its motion for summary judgment and the Housing Court awarded it possession, its lawyers may well have thought they could discern the proverbial light at the end of the tunnel. When the judge entered final judgment, the light may have shone a little more brightly. But today the SJC — which had reached down to transfer the matter to itself from the Appeals Court — vacated the summary judgment and reinstated the tenants’ counterclaims, thereby snuffing out the light and turning Fannie Mae back into the tunnel of Housing Court.

On appeal, the Regos argued that the mortgage company had failed to comply with the writing-under-seal requirement of the foreclosure statute, focusing on a statutory amendment enacted in 1906. The SJC’s decision goes into laudable detail explaining why this argument must fail. But the 93A counterclaim is another matter, the SJC held. Please note: The Regos raised 93A as a counterclaim, not a defense.

Fannie Mae argued that even if the 93A counterclaim was successful, it would not entitle the Regos to possession, only to monetary damages. Not so, contended the Regos: The court could deploy the equitable remedy of rescinding the foreclosure sale.

One of the organizations that responded to the SJC’s request for amicus briefs was Community Legal Aid, which stated that:

In certain cases, the equitable rescission of a foreclosure sale might not be the trial court’s remedy for violations of G.L.c. 93A. Nevertheless, the adjudication of different claims arising from the same facts supports both judicial economy and access to justice for low-income and elderly litigants who may be unable to advance claims independently.

Even if rescission is not on the cards and no right to possession is at issue any more, the Housing Court should retain jurisdiction, in other words. Of like mind, the SJC held:

“[U]nable to determine whether, in the context of the summary process action, the judge determined that the Regos’ G.L.c. 93A counterclaims and defenses did not entitle them to equitable relief affecting the right to possession, or whether he intended to consider that form of equitable relief, along with all other potential forms of equitable and monetary relief in the separate proceeding but erroneously concluded that he lacked the jurisdiction to do it.” (Emphasis added).

Of course, the Housing Court judge did, in fact, rule on the counterclaim, which tends to suggest that he had concluded that he had the jurisdiction to do so. Had he “erroneously concluded that he lacked the jurisdiction” he could have chosen a different course. But this absence of an express ruling on Fannie Mae’s jurisdictional argument led the SJC to sent the case back.

“All very interesting, I’m sure,” I hear you think, “but how does this affect me?”  Here’s how:

Landlords seeking possession should bear in mind that a tenant’s 93A counterclaim is an equitable defense.

Justin Sargent 6

Peter Vickery, Esq.

 

 

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