Zullo v. HMC Assets, LLC (Mass. App.
, 2015)
JOHN F. ZULLO
v.
HMC ASSETS, LLC, trustee.1
14-P-1696
COMMONWEALTH OF
MASSACHUSETTS APPEALS COURT
December 30, 2015
NOTICE: Summary decisions issued by the
Appeals Court pursuant to its rule 1:28, as
amended by 73 Mass. App. Ct. 1001 (2009),
are primarily directed to the parties and,
therefore, may not fully address the facts of
the case or the panel's decisional rationale.
Moreover, such decisions are not circulated to
the entire court and, therefore, represent only
the views of the panel that decided the case. A
summary decision pursuant to rule 1:28
issued after February 25, 2008, may be cited
for its persuasive value but, because of the
limitations noted above, not as binding
precedent. See Chace v. Curran, 71 Mass. App.
Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT
TO RULE 1:28
In 2007, the plaintiff, John F. Zullo,
borrowed over one million dollars from Lime
Financial Services, Ltd. (Lime). The loan was
secured by a mortgage on registered land
Zullo owned in Wayland. Zullo defaulted on
the note in June of 2008. This resulted in
many years of litigation in numerous judicial
forums, most of which Zullo himself brought
in preemptive efforts to avoid foreclosure. In
the current action, Zullo sought to expunge
two mortgage assignments from his
certificate of title. On summary judgment, a
Land Court judge declined such relief and
dismissed Zullo's petition, ruling in favor of
the current record owner of the mortgage,
defendant HMC Assets, LLC (HMC), as
trustee of the CAM III Trust. For the reasons
set forth below, we agree with the Land Court
judge that Zullo's
-1-
Page 2
petition fails as a matter of law, although for
reasons that differ somewhat from those
relied on by the judge.
Background. Except as otherwise noted,
the facts are undisputed. When Zullo
borrowed the money, he executed both a
promissory note made out to Lime and a
mortgage in the name of Mortgage Electronic
Registration Systems, Inc. (MERS), as
nominee for Lime. The mortgage was
recorded on the Wayland property's
certificate of title.
After Zullo defaulted, MERS assigned the
mortgage to DLJ Mortgage Capital, Inc.
(DLJ), and that assignment was noted on the
certificate of title on December 4, 2008. In
preparation for foreclosure, DLJ initiated an
action pursuant to the Servicemembers Civil
Relief Act to establish that Zullo was not
entitled to the benefits of that act. Although
that action resulted in a Land Court judgment
favorable to DLJ on May 27, 2009, DLJ held
off foreclosing on the property (for reasons
that do not appear in the record).
A foreclosure sale eventually was
scheduled for January of 2011, and two days
prior to that scheduled sale, Zullo brought an
action in Superior Court against DLJ and
others seeking to prevent it. In that action,
Zullo challenged DLJ's status as the current
holder of the mortgage. Although that action
resulted in the postponement of the
foreclosure sale, a Superior Court judge
dismissed it with prejudice by judgment
dated March
Page 3
18, 2011. With respect to the question
whether DLJ was the then-current mortgage
holder, the judge ruled that Zullo's alleged
"ignorance of who holds his mortgage [is] . . .
wholly without merit and frivolous and
advanced in bad faith."
 Zullo v. HMC Assets, LLC (Mass. App., 2015)
Zullo took no appeal from the Superior
Court judgment. Instead, he sought the
protection of the Bankruptcy Court through a
filing initiated on June 8, 2011. Some months
later (January 31, 2012), DLJ assigned its
mortgage to HMC. That assignment was
noted on the certificate of title on June 14,
2012.
Zullo's bankruptcy action eventually
terminated on January 7, 2013, after various
twists and turns. His efforts to block
foreclosure having foundered in both the
Superior Court and the Bankruptcy Court,
Zullo brought the current action in the Land
Court on February 19, 2013. Styling this
action as a petition to amend title to
registered land, Zullo sought to expunge the
two mortgage assignments from the
certificate of title, thereby precluding HMC
from foreclosing on the mortgage.2
The Land Court judge ruled that the
doctrine of claim preclusion barred Zullo
from litigating any claims it did bring,
Page 4
or could have brought, in the 2011 Superior
Court case, including any challenges to the
validity of the mortgage or of its assignment
from MERS to DLJ. The judge recognized
that claim preclusion could not bar Zullo from
raising claims based on actions that occurred
after the Superior Court judgment entered,
including those involving the assignment
from DLJ to HMC. He rejected those later
claims on the merits (as discussed further
below). In his order allowing HMC's motion
for summary judgment, the judge ordered the
following disposition:
"For the foregoing reasons, the
Summary Judgment motion is
ALLOWED. The Petition to
amend Certificate of Title is
DISMISSED WITH
PREJUDICE. It is hereby
DECLARED that (a) the
-2-
assignment of the Mortgage
dated August 22, 2008[,] and
noted as Document No.
01487689 on certificate of title
number 236444, on December
4, 2008, was validly registered,
(b) the assignment of the
Mortgage dated January 31,
2012[,] and noted as Document
No. 1803914 on said certificate
on August 14, 2012, was validly
registered, and (c) HMC is the
holder of the Mortgage."
There was no separate judgment disposing of
the case, only a docket entry stating "Case
Dismissed by Order of the Court."
In the body of the judge's summary
judgment order -- but not reflected in the
relief granted -- the judge discussed whether
HMC could proceed with foreclosure based
on a showing that it either possessed the
underlying note or had been authorized to act
on the noteholder's behalf. See Eaton v.
Page 5
Federal Natl. Mort. Assn., 462 Mass. 569, 571
(2012) (Eaton).3 In short, the judged stated
his view that a lost note affidavit in HMC's
possession provided sufficient proof to satisfy
the rule that Eaton established. Additional
facts related to HMC's rights with regard to
the note and to the adjudication of Eaton
issues below are reserved for later discussion.
Discussion. Dismissal of the petition. We
begin by reviewing whether the judge
properly dismissed Zullo's petition and then
turn to the judge's discussion of the Eaton
issues. As noted, the judge dismissed much of
the petition based on claim preclusion. Zullo
argues that the Land Court judge should not
have given preclusive effect to the Superior
Court action, because that court lacked
subject matter jurisdiction to determine the
validity of the mortgage and of its assignment
 Zullo v. HMC Assets, LLC (Mass. App., 2015)
since these involved interests in registered
land.4 See Sullivan
Page 6
v. Kondaur Capital Corp., 85 Mass. App. Ct.
202, 204 (2014) (Kondaur Capital) (noting
that a Superior Court judge transferred an
action challenging the validity of a mortgage
on registered land to Land Court "because the
complaint concerned claims of title to
registered land over which the Land Court
has exclusive jurisdiction"), citing G. L. c. 185,
§ 1(a 1/2), and Feinzig v. Ficksman, 42 Mass.
App. Ct. 113, 115-117 (1997) (Superior Court
lacks jurisdiction over cases that affect title to
registered land).
However, even if the Superior Court
lacked jurisdiction, this does not necessarily
mean that Zullo now gets a second chance at
deciding issues that were addressed in the
earlier litigation. See Harker v. Holyoke, 390
Mass. 555, 559 (1983) (in some
circumstances, a plaintiff who chose a
particular forum and had a "full and fair"
opportunity to try his action there can be
precluded from retrying the matter in a
different court regardless of whether the
initial court had subject matter jurisdiction).
We need not resolve whether the Superior
Court judgment has preclusive effect over the
current Land Court action, because we agree
with HMC that Zullo's petition, in its entirety,
fails as a matter of law for other reasons.
Although Zullo has standing to claim that
the two mortgage assignments are void, he
has no basis on this record for doing so here,
where both assignors complied with the
dictates of
Page 7
G. L. c. 183, § 54B (the statute governing the
assignment of mortgages), and where HMC
otherwise demonstrated a simple chain of
title that well established its record ownership
of the mortgage. See Bank of N.Y. Mellon
-3-
Corp. v. Wain, 85 Mass. App. Ct. 498, 503
(2014) (Wain). Contrast Kondaur Capital,
supra at 206-208 (mortgage assignment can
be challenged where assignor did not comply
with G. L. c. 183, § 54B). To the extent that
Zullo argues that the MERS system cannot be
used in the context of registered land, such a
claim has been put to rest. See id. at 208-210.
To the extent Zullo seeks to challenge the
mortgage assignments on other grounds, such
as his claim that HMC and the trust on whose
behalf HMC holds title to the mortgage have
not complied with applicable trust law, he has
no standing to do so. See Wain, supra at 502-
503. Because we agree with the judge that
Zullo's petition to amend title to registered
land fails as a matter of law, the judge's
dismissal of that petition was proper.
Eaton issues. Much of the appellate
briefing addresses the judge's comments
regarding whether HMC was in a position to
satisfy the Eaton rule. As an initial matter,
Zullo argues that such issues were not
properly before the judge. We therefore turn
first to how those issues arose in the current
case.
At the time Zullo filed his petition, no
foreclosure proceedings had commenced.
Whether for that reason, or because
Page 8
of the limited nature of petitions to amend
certificates of title, the petition did not raise
an Eaton claim. Instead, the petition narrowly
targeted whether HMC held a valid mortgage
on the property.
When it filed for summary judgment,
HMC itself unsurprisingly did not raise the
question whether it was in a position to
satisfy the Eaton rule. Nor did Zullo raise the
issue in his opposition to that motion (with
the one qualification that Zullo noted his view
that the lost note affidavit was illegible). At
the hearing on the summary judgment
motion, the judge and the parties touched on
 Zullo v. HMC Assets, LLC (Mass. App., 2015)
the issue whether HMC held both the
mortgage and the rights to the note. At one
point, the judge asked Zullo, "[y]ou're not
making any allegations about the note, are
you?" Zullo responded, "[w]ell, I am. There's
some issues with the note in the opposition.
They've produced a lost note affidavit that is
basically illegible." Zullo then explained that
this was only a "secondary argument" because
in the context of a petition to amend a
certificate of title, he "didn't know how far
that argument was relevant." Later in the
hearing, the judge mentioned that "[t]he note
and the mortgage can travel separately [even
if t]hey have come together before the notice
of sale." After Zullo misinterpreted the judge
as saying that the note and mortgage here had
come into common ownership, the
Page 9
judge provided a clarifying response as
follows: "They haven't come together. No . . . .
I don't even care if they've come together. My
point is I don't have to care. There's no notice
of sale." In other words, the judge expressed
his view that the issue whether HMC could
satisfy the Eaton rule was not before him.
Several months after the parties had
argued the motion for summary judgment,
but before that motion had been resolved,
HMC began foreclosure proceedings. Seeking
to block the foreclosure sale, Zullo filed a
motion for preliminary injunction in the
current action (without amending his
underlying petition).5 In that motion, Zullo,
for the first time, pressed the Eaton issues,
arguing that HMC could not foreclose because
it had not demonstrated either that it held the
note or was authorized by the note holder to
foreclose.6 The judge's consideration of that
motion was mooted by an agreement between
the parties postponing the foreclosure sale for
two months so long as Zullo complied with
certain conditions. Just before those two
months had expired, the judge issued his
order allowing HMC's summary judgment
-4-
motion and dismissing Zullo's petition. In
that order,
Page 10
the judge expressed his views on the Eaton
issue even though neither party had raised or
briefed the issue in the context of the
summary judgment motion.
The Eaton issues fall outside the narrow
scope of Zullo's petition, which was never
amended. Some argument can be made that
the judge could have treated the pleadings
effectively as having been amended once
Zullo raised the Eaton issues in the
preliminary injunction context.7 However, the
limited scope of the relief that the judge
ordered confirms that he did not consider the
pleadings as having been amended in this
manner. Instead, the judge confined his
disposition of the case to the scope of the
current pleadings. Because the Eaton issues
were not resolved by the judgment, we do not
address them on appeal. Therefore, we do not
consider the judge's discussion of how Eaton
applies in circumstances where, as here, the
current
Page 11
holder of the note apparently cannot be
ascertained (the note allegedly having been
lost or destroyed). We note that deferring
consideration of how an entity in HMC's
position can satisfy Eaton will allow such
issues to be reviewed on a more fully
developed trial court record.8
Judgment affirmed.
By the Court (Katzmann, Milkey &
Hanlon, JJ.9),
/s/
Clerk
Entered: December 30, 2015.
 Zullo v. HMC Assets, LLC (Mass. App., 2015)
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Footnotes:
1. Of the CAM III Trust.
2.While the new Land Court action was
pending, a mortgage servicer, acting on behalf
of HMC, sent Zullo a 150-day notice of right
to cure letter pursuant to G. L. c. 244, §
35A(g). Zullo did not cure the default by the
cure date (March 20, 2014). A prior mortgage
servicer, acting on behalf of HMC's
predecessor, DLJ, had previously sent Zullo a
ninety-day demand letter in 2008.
3.Prior to Eaton, a mortgage holder could
foreclose without any showing that at the
time of the foreclosure it also held the rights
to the underlying debt. See Sullivan v.
Kondaur Capital Corp., 85 Mass. App. Ct.
202, 209 (2014), citing Eaton, supra at 587-
588. In Eaton, the Supreme Judicial Court
established a prospective rule that in order to
foreclose, a mortgagee must also demonstrate
either that it holds the underlying note or that
it has been authorized to act on the note
holder's behalf. See Eaton, supra at 586-588.
Application of Eaton to this controversy is
complicated by the fact that the original note
is apparently missing.
Zullo raised this issue in his summary
4.
judgment brief, and both parties discussed it
at the hearing on the motion for summary
judgment. However, the judge did not
address it in his ruling, and we therefore do
not have the benefit of his thinking on
whether the Land Court's jurisdiction was
exclusive.
Zullo also filed a related motion for a lis
5.
pendens.
6.Zullo's motions and any supporting
materials, and HMC's responses, have not
been included in the record appendices.
However, the nature of Zullo's arguments can
be gleaned from the transcript of the hearing
on the motions.
-5-
7.We are not unsympathetic to HMC's
protest that Zullo should not be allowed serial
opportunities to challenge HMC's right to
foreclose. At the same time, countervailing
fairness concerns would be raised by
considering the Eaton issues as having been
resolved by the judge's ruling on HMC's
summary judgment motion. Cf. Packaging
Indus. Group, Inc. v. Cheney, 380 Mass. 609,
616-617 & n.10 (1980) (hearing on
preliminary injunction cannot be
consolidated with trial on the merits "in such
a manner as to deprive a party of 'clear and
unambiguous notice' and 'a full opportunity'
to present [his] case") (citation omitted);
Federal Deposit Ins. Corp. v. Grupo Girod
Corp., 869 F.2d 15, 17-18 (1st Cir. 1989)
(cautioning against a trial court judge's
resolving an issue on summary judgment
unless the parties had due notice that the
issue was in play, especially where the issue
arose in an "unsettled area of the law").
8. Perhaps because the summary
judgment record was not developed with an
eye toward Eaton, it includes next to nothing
about what happened to the original note. For
example, the affiant of the lost note affidavit,
an officer of one of the entities that had
serviced the Zullo loan on behalf of DLJ
(HMC's predecessor), stated that his company
"believe[d]" the original note had been
destroyed, though he does not actually state
that the note was ever in his company's or
DLJ's possession.
9.The panelists are listed in order of
seniority.
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