STRUSKI v. BANK OF AMERICA (2020)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The plaintiffs appeal from the dismissal of the claims asserted in their amended complaint, as well as from the denial of their motion for summary judgment. We affirm the dismissal of most of their claims. However, we reluctantly conclude that the plaintiffs' assertion that their signatures on the note were forged and the related question whether they ratified the note nonetheless were not amenable to disposition on a motion to dismiss because they depended on materials outside the complaint. We accordingly affirm in part, and vacate in part on the limited issues of forgery and ratification.

The plaintiffs' amended complaint asserted claims for injunctive relief, declaratory judgment, violation of G. L. c. 93A, accounting, wrongful foreclosure, violation of G. L. c. 140D, fraud, civil conspiracy, intentional or negligent infliction of emotional distress, and to quiet title. As developed below and presented here on appeal, the plaintiffs rest these claims on three underlying theories. First, they contend that the underlying note was accelerated and that the acceleration date of the note is to be used for purposes of calculating the five-year enforcement period under the obsolete mortgage statute, G. L. c. 260, § 33. Second, they contend that the mortgage is no longer enforceable because the statute of limitations on the underlying note, pursuant to G. L. c. 106, § 3-118, has expired. Third, they contend that the forgery of their signatures on the promissory note renders that instrument void and the mortgage unenforceable.

The first of these arguments is controlled and defeated by Nims v. Bank of N. Y. Mellon, 97 Mass. App. Ct. 123 (2020). Even were we to assume here that the note was accelerated as the plaintiffs contend (but the defendants dispute), the acceleration date would not affect the enforceability period under the obsolete mortgage statute. Id.

The second of the plaintiffs' theories is equally easily disposed of. “The SJC has repeatedly held over the last 180 years that, at both law and equity, the inability to recover directly on a note due to the expiration of a statute of limitations is no bar to recovery under a mortgage, so long as the underlying debt remains unpaid.” In re Fortin, 598 B.R. 689, 692 (D. Mass. 2019), and cases cited therein. See Thornton v. Thornton, 97 Mass. App. Ct. 694, 695 (2020).

We turn, accordingly, to the plaintiffs' third argument, which is that the judge failed to accept the well-pleaded allegations of the amended complaint that their signatures on the promissory note were forged and instead resolved that factual issue against them. The amended complaint alleges that, although the plaintiffs executed a mortgage on July 24, 2003, they have no recollection of signing its underlying promissory note. When they received a notice from the defendant law firm Guaetta & Benson, LLC, in 2017, the plaintiffs “examined the [p]romissory [n]ote copy and discovered that it bore forgeries of their signatures.” Attached to the amended complaint was an affidavit from the plaintiffs in which they averred that they did not sign the promissory note, and included examples of their signatures that they claimed differed from those on the note.⁴

The defendants moved to dismiss the amended complaint, submitting numerous documents designed to show that the plaintiffs had acknowledged and ratified the promissory note and mortgage. Among other things, these documents showed that (1) the plaintiffs never disputed receiving the loan proceeds ($505,000) evidenced by the note, (2) the plaintiffs submitted loan payments during the seven years before their default in 2010, (3) the plaintiffs requested reinstatement of the loan, (4) David Struski listed the mortgage as a valid, secured lien in his chapter 7 bankruptcy filing, and (5) the plaintiffs admitted signing the mortgage, which referenced the note. The defendants argued that, even accepting the plaintiffs' claim that their signatures were forged, they would nonetheless be bound on the note because “the person whose name is borne as maker on a promissory note may render himself liable on the note, in spite of the fact that the name was placed there without authority by some one other than himself, even in circumstances where the signature is a forgery, if, with full knowledge of the facts, he, subsequent to the execution, adopts the signature as his own and ratifies the action originally authorized.” Coral Gables, Inc. v. Granara, 285 Mass. 565, 571 (1934).

Before the court could rule on the motion to dismiss, the plaintiffs moved for partial summary judgment ⁵ on the ground that the question of forgery could be determined as a matter of law on the undisputed facts. The defendants opposed the partial summary judgment motion, disputing the forgery and citing the need for discovery. The defendants did not cross-move for judgment in their favor.

Both motions were heard at the same hearing. As pertinent here, the plaintiffs opposed the motion to dismiss on the ground that the allegations regarding forgery needed to be accepted as true. As to the summary judgment motion, the plaintiffs argued that the judge could compare the signatures on the note with other examples submitted by the plaintiffs and determine -- as a matter of law -- that those on the note were forged. Defendants' counsel, on the other hand, argued that whether the signatures were forged was a question of fact that could not be resolved on summary judgment, and that discovery was necessary.

The judge denied the plaintiffs' motion for partial summary judgment on the grounds that a material issue of disputed fact existed and that the motion was premature because discovery was ongoing.⁶ Pertinent to what is before us now, the judge allowed the motion to dismiss on the ground that the plaintiffs had, as a matter of law, ratified the note. This appeal followed.

We agree with the motion judge that the materials the defendants presented would be sufficient to show that the plaintiffs ratified the note. We disagree, though, that those materials could be considered in the context of a motion to dismiss. A motion to dismiss tests the sufficiency of the complaint, accepting as true the factual allegations of the complaint and all reasonable inferences that can be drawn from them in favor of the plaintiff. Lopes v. Commonwealth, 442 Mass. 170, 172 n.3 (2004). When a party moves to dismiss based on materials outside the complaint, the judge should, after notice, convert the motion to one for summary judgment. Mass. R. Civ. P. 56 (b), 365 Mass. 824 (1974). See Stop & Shop Cos. v. Fisher, 387 Mass. 889, 892 (1983). Here, however, it does not appear from the transcript of the hearing that the judge intended to convert the motion to dismiss to a motion for summary judgment. Nor did the defendants ask that she do so. Nothing would have put the plaintiffs on notice that the motion to dismiss would be converted to one for summary judgment, especially when we consider that the defendants did not cross-move for summary judgment on the question whether the plaintiffs' signatures were forged and, if so, whether they nonetheless ratified their obligations under the note.

In these circumstances, we are constrained to vacate that part of the judgment in the defendants' favor on count II (declaratory judgment), count III (violation of c. 93A), count V (wrongful foreclosure), count VII (fraud), and count XI (quiet title) of the amended complaint, only to the limited extent that those claims rest on the plaintiffs' allegation that their signatures on the note were forged. The defendants shall continue to have all defenses, including ratification, to those claims as so limited. In all other respects, the judgment is affirmed.

So ordered.

Vacated in part; affirmed in part

FOOTNOTES

4.   The plaintiffs' appendix does not include the exhibits to the amended complaint. However, we have assumed that the affidavit appearing at pages 103 et seq. of the plaintiffs' appendix is what is referenced in the amended complaint.

5.   Plaintiffs' counsel stated during the hearing on the motion for summary judgment that the issue of forgery relates only to count II (declaratory judgment), count III (violation of c. 93A), count V (wrongful foreclosure), count VII (fraud), and count XI (quiet title), which are the five claims upon which summary judgment was sought.

6.   The judge correctly denied summary judgment in the plaintiffs' favor on these bases. The validity of the plaintiffs' signatures on the note could not be determined as a matter of law.