Alleged mortgagee needed to possess the "power of
sale" at the time they foreclosed; thus mortgagor's questioning that the
assignment did not take place prior to the foreclosure was proper; one who
exercises power of sale must strictly follow its terms:
Juarez v. Select Portfolio Servicing, No. 11-2431
(1st Cir. 2/12/13):
Judgment dismissing complaint alleging defendants
illegally foreclosed on her home is reversed and remanded, where the complaint
states plausible claims for relief and that the district court abused its
discretion in deciding that it would be futile to allow an amendment to the
complaint. Juarez properly alluded to a challenge that the assignment did not
take place prior to the foreclosure thus, the foreclosing
entity did not have the "power of sale" at the time they exercised it - which is
a different challenge than a mortgagor's challenge to the validity of a
third-party assignment. The issue of whether a "confirmatory assignment" cured
the alleged defect was properly the subject of discovery and the complaint
should have proceeded on that point. One who exercises the power of sale must
strictly follow its terms. In this Massachusetts case, an assignment of the
mortgage must take place before the foreclosure begins. Further, in light of
this, the plaintiff should be allowed to amend and re-plead her fraud and
Section 93A claims (Mass. Consumer Protection Statute). Massachusetts covenant
of good faith and fair dealing is taken to be implied in every contract, and
provides "that neither party shall do anything that will have the effect of
destroying or injuring the right of the other party to receive the fruits of the
contract" - the covenant only "governs conduct of parties after they have
entered into a contract.
Juarez: Click
here: USCA1 Opinion
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