Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 1 of 18

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS __________________________________________ ) STEPHEN LEZAMA, et al., ) ) Plaintiffs, ) ) v. ) ) DEUTSCHE BANK NATIONAL TRUST CO., ) et al., ) ) Defendants. ) __________________________________________)

Civil Action No. 09-10168 RGS

DEFENDANT MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.S MOTION TO DISMISS PLAINTIFFS COMPLAINT AND MEMORANDUM OF LAW Mortgage Electronic Registration Systems, Inc. (MERS),1 pursuant to Federal Rule of Civil Procedure 12(b)(6), moves to dismiss Plaintiffs Complaint (the Complaint) because it fails to state a claim against MERS upon which relief can be granted. I. INTRODUCTION Plaintiffs Class Action Complaint as to MERS is woefully deficient on its face, as it fails to allege viable claims against MERS. The Complaint fails to allege any fact or reason for MERS to be involved in this lawsuit. Indeed, the allegations contained in the Complaint show that MERS was not involved whatsoever in the wrongful foreclosures for which the Plaintiffs complain.

The Complaint names Mortgage Electronic Registration Systems, Inc. as a Defendant, which is a whollyowned subsidiary of MERSCORP, Inc. As explained, infra, MERSCORP, Inc. tracks both the beneficial interests in, and servicing rights to, mortgage loans as they travel through the marketplace. MERSCORP Inc.s subsidiary MERS is the mortgagee of record as the nominee for lenders, and the lenders successors and assigns.

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 2 of 18

The gravamen of the Complaint is that foreclosure proceedings have been wrongfully conducted against Plaintiffs, who are Massachusetts residential mortgage loan borrowers. Plaintiffs claim that, as a result of these wrongful foreclosures, this Court should declare such proceedings to be void. Specifically, Plaintiffs allege that their residences were foreclosed upon, in violation of Massachusetts statutes, by entities that did not have the legal authority to do so under the states statutory power of sale. In so doing, the Complaint alleges that these foreclosing entities violated Massachusetts statutes by inaccurately representing in written notices that they had the authority to foreclose. But MERS was not one of the entities foreclosing. In other words, the Complaint deals exclusively with the conduct of parties who have foreclosed on property owned by the Plaintiffs (and the Plaintiffs alleged to be in the putative class). But as such, the Complaint is without basis as to MERS, and it fails to allege that MERS did anything wrong. As alleged in the Complaint, MERS was the original mortgagee with respect to some of the Plaintiffs loans. But Plaintiffs do not allege that MERS ever exercised the power of sale against any of the Plaintiffs, or that MERS ever participated in or sent notice to anyone in connection with foreclosure proceedings. To the contrary, the Complaint contains detailed factual allegations identifying specifically the entities that undertook such conduct, and MERS is not among them. What is more, it is clear from the face of the public records referenced and relied upon in the Complaint, i.e., the allegedly wrongful notices and other documentation of the foreclosure proceedings, that MERS had nothing to do with the alleged wrongful foreclosures. Plaintiffs surely cannot be heard to claim that MERS violated any statutory or common law duties relating to conduct in a foreclosure process in which MERS is not alleged to have played a part. Yet, in the absence of factual allegations of wrongful conduct, Plaintiffs

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 3 of 18

collectively include MERS as one the Named Foreclosure Defendants and the Defendants Class, against whom, without any reference to MERS, all three Counts in the Complaint are alleged. Such allegations are insufficient, even under the minimal requirements of notice pleading, to state a claim against MERS. Finally, as alleged in the Complaint, MERS no longer holds any interest whatsoever in any of Plaintiffs mortgages, having assigned away all rights it once held as mortgagee. There is, therefore, no reason for MERS to be a party to this lawsuit, and it should be dismissed. II. FACTUAL BACKGROUND By way of background, it may be helpful to discuss who MERS is, what role it plays in real estate loans and mortgages, and its relationship with lenders and other mortgagees. As a separate entity, MERS is the mortgagee of record until such time that MERS assigns the mortgage or the mortgage is satisfied. In this case, MERS assigned the mortgages to various entities, who are now alleged to have wrongfully conducted foreclosures under the procedures set forth in the Massachusetts statutes. A. Lenders And The Residential Mortgage Market When a mortgage lender loans money to a home buyer, it obtains two documents: (1) a promissory note in the form of a negotiable instrument from the borrower; and (2) a mortgage instrument. A promissory note is generally a negotiable instrument under Article 3 of the Uniform Commercial Code, and as such, it is bought and sold. See In re MERSCORP, Inc., RESPA Litigation, MDL No. 1810, 2008 U.S. Dist. LEXIS 40473 (S.D. Tex. May 16, 2008), at *14. The mortgage, as distinguished from the note, is the lien on the property that secures the repayment of the loan, and it is the mortgage, not the note, that is recorded in the 3

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 4 of 18

public, local land records. Two aspects of a mortgage loan are usually bought and sold servicing and beneficial rights. Id. The servicing rights include the right to collect monthly escrow, principal, and interest payments from the borrower, and the beneficial rights include the right to receive repayment of the loan. Id. In 1993, MERSCORP, Inc. and MERS were created. MERSCORP, Inc. has an electronic registration system and clearinghouse that is similar to the process used with great success by the Depository Trust Company for the securities industry. It tracks both beneficial ownership interests in, and servicing rights to, mortgage loans as they change hands throughout the life of the loan. MERS serves as the mortgagee of record on behalf of the MERS lender and the lenders successors and assigns. B. How MERS Works When a borrower enters into a mortgage agreement, he or she signs a contract naming MERS as the mortgagee of record. In the mortgage contract, the borrower conveys, grants and assigns his or her right, title, and interest in the property to MERS, as nominee for the lender, and the lenders successors and assigns. See MERS Mortgage, Compl., Ex. F at 1. The borrower contractually agrees in the mortgage that, in the event of default on the loan, MERS, as the mortgagee, is the party authorized to foreclose on the home.2 After the borrower signs the mortgage agreement, it is recorded in the public, local land records with MERS as the named mortgagee, and MERSCORP, Inc. then tracks the beneficial and servicing rights to the mortgage. When the note is sold by the original lender to others, the various sales of the note are tracked on the MERS System. As long as the sale of the note involves a MERS member,

Id. at 2 (Borrower understands and agrees that . . . MERS (as nominee for Lender and Lenders successors and assigns) has the right to exercise any and all of those interests, including the right to foreclose and sell the Property).

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 5 of 18

MERS remains the named mortgagee of record, and continues to act as the mortgagee, as the nominee for the new note owner (and MERS member). And there is no need for the seller of the note to assign the mortgage because MERS remains the mortgagee as the nominee for the purchaser of the note, who is the lenders successor and assign. This relationship is generally memorialized in the original mortgage instrument to which the borrower is a party, as well as in the MERS membership agreements. If, however, a member is no longer involved with the note after it is sold, an assignment from MERS to the non-MERS member is provided by MERS, and that assignment is recorded in the county where the real estate is located, and the mortgage is deactivated from the MERS System. .3 In some instances, where MERS is serving as the mortgagee, MERS may assign the mortgage to a MERS member. This assignment allows the assignee-member to be the title holder of the mortgage. This is precisely what Plaintiffs allege in their Complaintthat is, MERS assigned its mortgage to a member of MERS so that the member could proceed as the mortgagee in order to foreclose on the property securing the debt. C. Plaintiffs Claims Plaintiffs are residential mortgage loan borrowers residing in the state of Massachusetts. See Compl. 1. The basis of Plaintiffs Complaint is that the statutory power of sale contained in Massachusetts statute G.L. c. 183 21 was exercised by entities without the requisite legal authority to do so,4 see id. 143, 149, and that these entities violated the

The MERS membership agreement, as well as the rules and procedures governing MERS and its members, are available on the MERS website at www.merscorpinc.org. G.L. c. 183 21 grants the authority to certain parties to sell mortgaged property upon a default by the borrower. The statute provides, in relevant part, upon any default . . . the mortgagee or his executors, administrators, successors or assigns may sell the mortgaged premises . . . by public auction . . . first complying with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale, and may convey the same by proper deed . . . absolutely and in fee simple;

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 6 of 18

Massachusetts statutes relating to the foreclosure of mortgages by the exercise of a power of sale, by sending or publishing improper legal notices pursuant to G.L. c. 244 145 and 35A.6 See id. 151-2, 163-4. These claims involve Counts I and II of the Complaint. Plaintiffs also claim, in Count III of the Complaint, that the entities responsible for exercising the statutory power of sale owed the Plaintiffs a duty of good faith and reasonable diligence in the conduct of the foreclosure proceedings against them, and that this duty was breached by conducting foreclosure proceedings without assignment of the relevant mortgage. See id. 172-3. Plaintiffs allege that they were damaged and they seek equitable relief, mainly that the foreclosures conducted be declared void. See id. 156-7, 166-8, 177-81. These allegations do not relate to MERS and the Complaint should be dismissed as to it. III. LEGAL DISCUSSION A. Legal Standard To survive a motion to dismiss, a complaint must plead sufficient facts to state a claim of relief that is plausible on its face. Bell Atlantic v. Twombly, 127 S. Ct. 1955, 1974 (2007). While a complaint challenged by a motion to dismiss does not need detailed factual allegations, a plaintiff is obligated to provide factual allegations that raise a right to relief above the speculative level, and further, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions. Id. at 1964-65.7

and such sale shall forever bar the mortgagor and all persons claiming under him from all right and interest in the mortgaged premises, whether at law or in equity.
5

G.L. c. 244 14 sets forth procedures for foreclosure under a power of sale, including the sending of required notices and forms. See G.L. c. 244 14. G.L. c. 244 35A provides the right to a residential real property mortgagor to cure a default, and sets forth procedural requirements to be followed in the course of foreclosure proceedings. See G.L. c. 244 35A. The Supreme Courts decision in Twombly tightened the standards for Courts evaluating a Rule 12(b)(6) motion to dismiss. Prior to Twombly, courts were utilizing the no set of facts standard that sprang from Conley v. Gibson, 78 S. Ct. 99, 102 (1957). The no set of facts standard was that once a claim has been

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 7 of 18

Indeed, a court need accept as true only the plaintiffs well-pled factual contentions, not its conclusory allegations, and specifically, a court may not consider conclusions which are either unsupported by or inconsistent with the factual allegations contained in the Complaint. See Papasan v. Allain, 106 S. Ct. 2932, 2944 (1986) (on a motion to dismiss, courts are not bound to accept as true a legal conclusion couched as a factual allegation); Gooley v. Mobil Oil Corp., 851 F. 2d 513. 514 (1st Cir. 1998) (a court must accept the well-pleaded factual averments . . . as true . . . exempting, of course, those facts . . . conclusively contradicted by plaintiff's concessions or otherwise) (citation omitted); U.S. v. AVX Corp., 962 F. 2d 108, 115 (1st Cir. 1992) (conclusions, not logically compelled, or at least supported, by the stated facts, deserve no deference) (citations and quotations omitted). The court may look beyond the factual allegations of the complaint and consider exhibits attached thereto. See Fed. R. Civ. P. 10(c) (A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.). Furthermore, when the exhibits contradict the allegations of the pleading, the exhibits govern. See Clorox Co. P.R. v. Proctor & Gamble Comml Co., 228 F.3d 24, 32 (1st Cir. 2000) (It is a well-settled rule that when a written instrument contradicts allegations in the complaint to which it is attached, the exhibit trumps the allegations.) (citations omitted). Similarly, the court may properly consider the relevant entirety of a document integral to or explicitly relied upon in the complaint, even though not attached to the complaint, without converting the motion into one for summary judgment. Id. (citations omitted); see

stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint. Twombly, 127 S. Ct. at 1969 (emphasis added). But the Twombly court made clear that Conleys no set of facts language is best forgotten as an incomplete, negative gloss on an accepted pleading standard. Twombly, 127 St. Ct. at 1969; see Thomas v. Rhode Island, 542 F.3d 944, 948 (1st Cir. 2008)(the no set of facts standard set forth in Conley no longer governs in light of Twombly).

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 8 of 18

Watterson v. Page, 987 F. 2d 1, 3-4 (1st Cir. 1993) (explaining that the main problem of looking to documents outside the complaintlack of notice to plaintiffis dissipated [w]here plaintiff has actual notice ... and has relied upon these documents in framing the complaint). B. The Complaint Should be Dismissed as to MERS.8 1. Plaintiffs fail to meet the minimal pleading requirements of Fed. R. of Civ. P. 8(a)(2). The Plaintiffs allege three counts against MERS. Count I is brought by the purported Foreclosed Borrower Subclass Plaintiffs, alleging that their properties were wrongfully foreclosed upon. See Compl. 150.9 Specifically, Plaintiffs allege that the statutory power of sale contained in Massachusetts statute G.L. c. 183 21 was exercised by the Named Foreclosure Defendants and the Defendants Class without the requisite legal authority to do so, see Compl. 149, and that the Named Foreclosure Defendants and the Defendants Class, acting by and through the Foreclosing Law firms and others, violated the Massachusetts statutes relating to the foreclosure of mortgages by the exercise of a power of sale, by sending improper legal notices pursuant to G.L. c. 244 14, asserting authority to foreclose by assignments that did not then exist. See Compl. 151. Count II of the Complaint is brought by the purported Improper Notice Subclass, and similarly purports to allege that the Named Foreclosure Defendants and the Defendants Class, acting by and through the Foreclosing Law firms and others, violated G.L. c. 244 14 and/or 35A by sending improper
8

MERS is not a party in a related class action currently before this court, Manson v. GMAC Mortgage, LLC, et al., Civil Action No. 08-12166-RGS, in which Harmon Law Offices Motion to Consolidate with this case is pending. MERS opposes consolidation of this case with Manson for class certification or trial purposes. The Foreclosed Borrower Subclass is defined in the Complaint as follows:

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 9 of 18

legal notices asserting authority to foreclose by assignments that did not then exist, and made misrepresentations to the Land Court regarding its authority to exercise the power of sale based on the assignments. See Compl. 163, 165.10 And in Count III, brought by both of Plaintiffs purported classes, Plaintiffs allege that the Named Foreclosure Defendants and the Defendants Class owed a duty of good faith and reasonable diligence in the conduct of the foreclosure proceedings, and that this duty was breached by conducting foreclosure proceedings without assignment of the relevant mortgage. Compl. 172-3. To suggest that all purported members of the Named Foreclosure Defendants and the Defendants Class violated the foreclosure statutes and breached alleged duties owed to all individuals whose primary residence was foreclosed by power of sale in the past four years in the same collective manner does not state claims that are plausible on their face. See Twombly, 127 S. Ct. at 1974. These sweeping allegations simply do not meet the minimal pleading requirements of Rule 8(a)(2). Notice pleading rules do not relieve a plaintiff of responsibility for identifying the nature of her claim. Calvi v. Knox County, 470 F.3d 422, 430 (1st Cir. 2006) (citing Gooley v. Mobil Oil Corp., 851 F. 2d 513, 514 (1st Cir. 1988)) (explaining that although

Individuals whose primary residence was foreclosed by power of sale in the past four years by a Member of the Defendants Class that did not have actual written assignment of the mortgage being foreclosed at the time that notice of sale was sent pursuant to G.L. c. 244 14. Compl., 129.
10

The Improper Notice Subclass is defined in the Complaint as follows: Individuals who presently have a foreclosure sale scheduled by a Member of the Defendants Class that did not have actual written assignment of the mortgage being foreclosed at the time that notice of sale was sent pursuant to G.L. c. 244 14, and/or at the time that notice of the right o cure was sent, if required, pursuant to G.L. c. 244 14 and 35A. Compl. 129.

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 10 of 18

the requirements of Rule 8(a)(2) are minimal, minimal requirements are not tantamount to nonexistent requirements). Consequently, the statement of claim must, at a bare minimum, give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. Id. (citations omitted). Here, Plaintiffs claims that the Named Foreclosure Defendants and the Defendants Class, acting by and through the Foreclosing Law firms and others, violated Massachusetts statutes and common law duties owed to a class as numerous as Plaintiffs simply do not set forth minimal facts as to who did what to whom, when, where, and why. See Id. Notwithstanding, even if Plaintiffs claims are sufficiently pled under Rule 8(a)(2), they are not so pled against MERS. As to MERS, Plaintiffs claims appear to rest on but a single conclusory allegationto wit: MERS, through various agents, conducted the foreclosure sales of the Kayi and the Szumik property. See Compl. 15 (the Sole Conclusory Allegation). But the Sole Conclusory Allegation is speculative at best, if not disingenuous. Plaintiffs do not allege any facts stating that MERS was involved in the foreclosure proceedings, and the facts that are alleged show that MERS had nothing to do with the foreclosures. The Sole Conclusory Allegation, therefore, cannot be accepted as true and cannot form the basis of any claim by Plaintiffs against MERS. See Twombly, 127 S. Ct. at 1964-65; Papasan, 106 S. Ct. at 2944; Gooley, 851 F. 2d at 514; AVX Corp., 962 F. 2d at 115; Clorox Co. P.R., 228 F.3d at 32. 2. Plaintiffs do not allege any facts showing that MERS was involved in the foreclosure processes about which they complain. The Sole Conclusory Allegation should not be accepted as true and cannot form the basis of any claim against MERS because it is wholly unsupported by factual allegations in the Complaint. See AVX Corp., 962 F. 2d at 115. Indeed, there is not a single factual allegation

DB1/62762591.1

10

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 11 of 18

in the Complaint showing that MERS was involved in the foreclosure proceedings against Plaintiffs in any way. The Complaint alleges that MERS was involved in three of the four loans for the named Plaintiffsthe Kayi loan, the Szumik loan, and the Dosanjos loan (collectively, the Loans). See Compl. 56, 77, 98. With respect to all three Loans, MERS served as the original mortgagee, as the nominee for the respective lender, and the lenders successors and assigns. The initial lenders for the Loans were Sallie Mae Home Loans, Inc. (the lender on the Kayi Loan), and Credit Suisse First Boston Financial Corporation (the lender on the Szumik and Dosanjos Loans). See id. 56, 78, 99, Ex. F; Kayi Mortgage, attached as Exhibit A; Dosanjos Mortgage, attached as Exhibit B. As alleged in the Complaint, MERS subsequently assigned all of its rights as mortgagee in all three Loans, so that MERS now holds no interest in any of the Loans. See id. 71, 93, 114, Ex. J (Szumik Assignment); Kayi Assignment, attached as Exhibit C; Dosanjos Assignment, attached as Exhibit D. Nowhere in the Complaint, however, are any facts alleged showing that MERS played any role in the alleged wrongful notice or foreclosure conduct. With respect to all three Loans, the Complaint alleges that an Order of Notice was issued by the Land Court. See Compl. 59, 80, 101. MERS, however, is not mentioned anywhere in the Complaint as being responsible for any Order of Notice, or in the Order of Notice itself. See generally, Compl.; Kayi Order of Notice, attached as Exhibit E; Compl., Ex. G (Szumik Order of Notice); Dosanjos Order of Notice, attached as Exhibit F.11 The Complaint further alleges, as to all three Loans, that after the issuance of an Order of Notice by the Land Court, a Notice of Sale was published. See Compl. 62, 83,
11

In fact, MERS appears in each Order of Notice only in the legal description of the original mortgage. See Ex. E at 1; Compl., Ex. G at 1; Ex. F at 1.

DB1/62762591.1

11

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 12 of 18

104. MERS is not mentioned anywhere in the Complaint as being responsible for issuing any Notice of Sale, or in the Notice of Sale itself. See generally, Compl.; Kayi Notice of Sale, attached as Exhibit G; Compl., Ex. H (Szumik Notice of Sale); Dosanjos Notice of Sale, attached as Exhibit H.12 Next, the Complaint alleges that Plaintiffs properties were sold by foreclosure and that a Certificate of Entry was issued in connection with each foreclosure sale. See Compl. 67, 89, 110. The Complaint does not allege any facts showing that MERS played any role in the foreclosure sales, and as with the Orders and Notices of Sale, MERS is not mentioned anywhere in the Complaint as being responsible for any Certificate of Entry, or in the Certificate itself. See generally, Compl.; Kayi Certificate of Entry, attached as Exhibit I; Compl., Ex. I (Szumik Certificate of Entry); Dosanjos Certificate of Entry, attached as Exhibit J.13 The Complaint concludes that [e]ach of the Land Court pleadings and notices were inaccurate when signed and misrepresented the authority of [the foreclosing entity] to act under the mortgage. Compl. 74, 85, 117. But Plaintiffs do not allege that MERS, or anyone on behalf of MERS, signed any of the pleadings and notices, or that any such notices and pleadings were done or pursued on behalf of MERS. See generally, Compl.; Compl., Exs. G, H, I; Exs. E, F, G, H, I, J. The Complaint also fails to allege that MERS made, and it is clear on the face of the pleadings and notices themselves, that MERS did not make, any representations whatsoever therein. Id.

12

As with the Order of Notice, supra f.n. 11, MERS appears in each Notice of Sale only in the legal description of the original mortgage. See Ex. G at 1; Compl., Ex. H at 1; Ex. H at 1. MERS appears in each Certificate of Entry only in the legal description of the original mortgage. See Ex. I at 1; Compl., Ex. I at 1; Ex. J at 1.

13

DB1/62762591.1

12

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 13 of 18

In other words, it is nowhere alleged in the Complaint that MERS was involved in the exercise of the statutory power of sale or the sending of any notices in relation to Plaintiffs mortgage loans, and therefore, Counts I and II should be dismissed. See, e.g., Gooley, 851 F. 2d at 514 (affirming 12(b)(6) dismissal where the plaintiff pleaded no facts adequate to entitle him to offer evidence in support of his (entirely conclusory) assertions). Likewise, Plaintiffs fail to allege that MERS conducted any foreclosure proceedings against Plaintiffs, and they thus do not allege that MERS had or breached any duty of good faith and reasonable diligence in connection therewith. See West-Roxbury Co-op. Bank v. Bowser, 324 Mass. 489, 492 (1949) (the duty of good faith and reasonable diligence is applicable to the entity exercising a power of sale). 3. The factual allegations that are in the Complaint, the exhibits attached to the Complaint, and the public records relied upon in the Complaint contradict the Sole Conclusory Allegation.

The factual allegations that are in the Complaint, the exhibits attached to the Complaint, and the public records relied upon in the Complaint, on their face, contradict and debunk the unfounded Sole Conclusory Allegation. Indeed, with respect to all three Loans, the Complaint alleges that an Order of Notice was issued by the Land Court showing an entity other than MERS as the holder of the mortgage. See Compl. 59 (Kayi Order of Notice reflects that Sallie Mae is the holder of the mortgage.), 80 (Szumik Order of Notice reflects that U.S. Bank is the holder of the mortgage), 101 (Dosanjos Order of Notice reflects that U.S. Bank is the holder of the mortgage). The Complaint further alleges that at the time the Orders of Notice were issued, Barrett Law was purported to act on behalf of Sallie Mae (not MERS) and Harmon Law was purported to act on behalf of U.S. Bank, as Trustee for Credit Suisse First Boston (not MERS),
DB1/62762591.1

13

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 14 of 18

and alleges that Barrett Law (not MERS) published a Notice of Sale stating that Sallie Mae (not MERS) was the present holder of the Kayi mortgage, and that Harmon Law (not MERS) published a Notice of Sale stating that U.S. Bank (not MERS) was the present holder of the Szumik mortgage, and stating that U.S. Bank (not MERS) was the present holder of the Dosanjos mortgage. See Compl. 58, 62-3, 65, 79, 83-4, 87, 100, 104-5, 108. Notably, the Kayi Notice of Sale is addressed from Sallie Mae Home Loans, Inc., by its attorneys, Nicholas Barrett and Associates, and the Szumik Notice of Sale and the Dosanjos Notice of Sale are both addressed from U.S. Bank, as Trustee for Credit Suisse First Boston. See Ex. G; Compl., Ex. H; Ex. H. Further, the Complaint alleges that Barrett Law (not MERS) conducted the foreclosure sale of the Kayi property on behalf of Sallie Mae (not MERS), and that Harmon Law (not MERS) conducted the foreclosure sales of the Szumik and Dosanjos properties on behalf of U.S. Bank (not MERS). See Compl. 67, 89, 110. And, Plaintiffs allege that Barrett Law (not MERS) issued the Certificate of Entry stating that Sallie Mae was the current holder of the Kayi mortgage, and that Harmon Law (not MERS) issued the Certificates of Entry stating that U.S. Bank was the current holder of the Szumik mortgage, and that U.S. Bank was the current holder of the Dosanjos mortgage. See Compl. 68, 90, 111, Ex. I; Ex. I; Ex. J. In other words, according to the allegations in the Complaint, the exhibits attached to the Complaint, and the public records referenced and relied upon in the Complaint, MERS, in fact, did not have anything to do with the foreclosure proceedings against Plaintiffs, in stark contradiction to the Sole Conclusory Allegation. The Sole Conclusory Allegation,

DB1/62762591.1

14

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 15 of 18

therefore, cannot be accepted as true and cannot form the basis of any claim against MERS. See Gooley, 851 F. 2d at 514; Clorox Co. P.R., 228 F.3d at 32. 4. MERS cannot be held vicariously liable for the conduct of the Foreclosing Law firms and others. Based on the allegations in the Complaint, MERS cannot be held vicariously liable for the conduct of the Foreclosing Law firms and others. In order for a relationship to exist such that MERS could be held liable for the conduct of the Foreclosing Law firms and others, there must have been a manifestation of consent by MERS to the Foreclosing Law firms and others that the Foreclosing Law firms and others were acting on behalf of MERS, and subject to MERS control, i.e., as MERS agent. See Kirkpatrick v. Boston Mut. Life Ins. Co., 393 Mass. 640, 645 (1985) (An agency results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control.) (citation omitted); Kelley v. Rossi, 395 Mass. 659, 661 (1995). (The right to control an agent's activities has been the guiding principle in deciding cases involving an assertion of vicarious liability against the agent's principal.). Plaintiffs do not allege any facts whatsoever to support a speculation or conclusion that the Foreclosing Law firms and others acted as an agent for MERS when the Foreclosing Law firms and others exercised the statutory power of sale or sent legal notices pursuant to G.L. c. 244 14 or G.L. c. 244 35A. See generally, Compl. To the contrary, the allegations in the Complaint and the public records referenced and relied upon in the Complaint make clear that the Foreclosing Law firms and others were not, in fact, agents of MERS. See Compl. 58, 67, 79, 89, 100, 110, Exs. F, G, H, I; Exs. B, C, D, E, F, G, H, I, J. Plaintiffs allegations, therefore, are insufficient to state claim against MERS on this basis. See Twombly, 127 S. Ct. at 1964-65; Papasan, 106 S.Ct. at 2944; Clorox Co. P. R., 228 F. 3d at 32.

DB1/62762591.1

15

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 16 of 18

IV. CONCLUSION In sum, Plaintiffs do not state a claim upon which relief can be granted against MERS for wrongful foreclosure because (1) Plaintiffs fail to meet the basic pleading standards set forth in Rule 8(a)(2); (2) Plaintiffs fail to allege any fact showing that MERS exercised the statutory power of sale under G.L. c. 183 21, sent any notices pursuant to G.L. c. 244 14 and/or 35A, or made any representations of any kind to the Land Court in connection with Plaintiffs loans; (3) the factual allegations of the Complaint, and the public records relied upon in the Complaint make it clear that MERS did not play any role in the foreclosure proceedings against Plaintiffs; and (4) Plaintiffs fail to allege a basis upon which MERS can be held liable for the conduct of the Foreclosing Law firms and others, or for a breach of the duty of good faith and reasonable diligence. Indeed, MERS assigned its rights under all of the Loans, and there is no reason for MERS to be included in this lawsuit. As such, the Complaint should be dismissed. REQUEST FOR ORAL ARGUMENT Pursuant to Local Rule 7.1(a), MERS believes that oral argument may assist the Court in deciding upon this Motion and does hereby request an oral argument pursuant to Local Rule 7.1(d). CERTIFICATE OF CONFERRING I hereby certify, pursuant to Local Rule 7.1(a)(2), that prior to the filing of this Motion, MERS conferred with Plaintiffs counsel and attempted in good faith to resolve or narrow the issues in dispute, and was unable to do so.

DB1/62762591.1

16

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 17 of 18

Dated: April 2, 2009

/s/ Todd S. Holbrook Todd S. Holbrook BBO # 563828 tholbrook@morganlewis.com Morgan, Lewis & Bockius LLP 125 High Street, 14th Floor Boston, MA 02110 Telephone: 617.341.7888 Facsimile: 617.341.7701 Robert M. Brochin Florida Bar No. 0319661 Admitted Pro Hac Vice rbrochin@morganlewis.com Morgan, Lewis & Bockius LLP 5300 Wachovia Financial Center 200 South Biscayne Boulevard Miami, FL 33131-2339 Telephone: 305.415.3000 Facsimile: 305.415.3001 Benjamin Weinberg Florida Bar No. 006159 Admitted Pro Hac Vice bweinberg@morganlewis.com Morgan, Lewis & Bockius LLP 5300 Wachovia Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2339 Telephone: 305.415.3432 Facsimile: 305.415.3001 Counsel for Defendant MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.

DB1/62762591.1

Case 1:09-cv-10168-RGS Document 36 Filed 04/02/09 Page 18 of 18

CERTIFICATE OF SERVICE I hereby certify that this document(s) filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF) and paper copies will be sent to those indicated as non registered participants on April 2, 2009.

/s/ Todd S. Holbrook Todd S. Holbrook

DB1/62762591.1