Yoyo et al v. AMC Mortgage Services et al

1The residential property at issue is located at 216 Highland Street, Brockton,
Massachusetts.
2Absent the relief requested herein, the Debtors must vacate the residence on December
1, 2007.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
Chapter 13
Case No. 07-17465-RS
Adversary Proceeding
No. 07-01425
PRELIMINARY INJUNCTION
The Debtors have filed a complaint to set aside the foreclosure of a mortgage on their
residence 1 and incident thereto have filed a motion for preliminary injunction, seeking to enjoin
the Defendants, during the pendency of this action, from enforcing a judgment for possession of
that residence or otherwise interfering with the Debtors’ possession and enjoyment thereof. 2 In
In re
LUDOVIC AND EVELYNE YOYO,
Debtors
LUDOVIC AND EVELYNE YOYO,
Plaintiffs
v.
AMC MORTGAGE SERVICES, INC.,
DEUTSCHE BANK NATIONAL TRUST
COMPANY and CITY RESIDENTIAL
Defendants
.
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3Under the Agreement, the Debtors waive their right to challenge the foreclosure after the
expiration of the Deadline. The deadline expired on September 12, 2007. The Debtor filed this
adversary proceeding on November 26, 2007.
opposition to the motion for preliminary injunction, the Defendant mortgagee argues that its
foreclosure was conducted properly, but also that, in an Agreement for Judgment that it entered
into with the Debtors in a prepetition state court action for possession of the premises, the
Debtors waived their right to seek a stay of execution and also agreed to a time limit, which has
now lapsed, on their ability to challenge the validity of the foreclosure sale. The Court held a
hearing on the motion on due notice to the Defendants and now renders its ruling.
There are two questions for the Court: first, whether a pre-petition, state court agreement for
judgment of possession, and particularly the foreclosure challenge deadline and waiver
provisions 3 thereof, bar the request by the Debtors in this court for foreclosure-related relief
(“Agreement”) (“Waiver”) (“Deadline”); and second, if there is no such bar, whether injunctive
relief is warranted.
I find that Defendant Deutsche Bank (“the Mortgagee”) did enter into an agreement for
judgment with the Debtors. In relevant part, the Agreement states:
Defendants [the Debtors] hereby waive all rights of appeal
including transfer and waive all rights to request a stay of
execution regardless or reason or circumstance. Defendants
reserve the right to file a challenge to the underlying foreclosure
action within twenty days from the date of this agreement [i.e.,
August 23, 2007].
The Mortgagee maintains that the first sentence bars this motion for preliminary injunction,
which in essence seeks a stay of execution. And it maintains that the second sentence, in setting
a deadline for filing a challenge to the foreclosure sale that lapsed approximately two months
before this action was commenced, bars the underlying action entirely and, in doing so,
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establishes that the Debtors cannot establish the first requirement of a preliminary injunction, a
likelihood of success on the merits. The Debtors contend that the deadline should not be
enforced because Debtor Ludovic Yoyo was prevented during this period by his struggle with
cancer from taking any action, but also that the Mortgagee itself rendered the 20 day period
useless by, in violation of its duty of good faith, refusing to produce an accounting of the
foreclosure sale, of the procedure employed in conducting it, and other evidence necessary for
the Debtors to enable the filing of a complaint within the 20 day period.
I make the following findings and rulings on these issues. First, the waiver of the right to
seek a stay of execution, though categorical if read standing alone, is subject to the later-inserted
sentence that follows it, which carved out a right to challenge the foreclosure sale. Clearly, the
parties, by adding the second sentence as a qualification of the first, contemplated that a
challenge to the foreclosure sale would be cause to seek a preliminary injunction against
enforcement of the execution for possession. Second, on the evidence before me, the Mortgagee
breached its duty of good faith to the Debtors by failing to produce documents and other
evidence relating to the foreclosure sale, despite repeated timely requests by the Debtors for such
information. The requested information was critical to a decision to file a complaint; and the
Mortgagee was obligated to produce it, not only as a foreclosing mortgagee faced with a request
for information by consumer borrowers but as the counter-party to the Agreement for Judgment.
Under principles of contract law, the 20-day period should be deemed extended through the
commencement of this action, in order to give the Debtors the benefit of their agreement, which
benefit would otherwise be nullified by the Mortgagee’s non-cooperation.
I further find that good cause exists for the issuance of the requested preliminary injunction,
namely, that (a) the original mortgage loan and subsequent forbearance agreement appear to
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4It appears that Deutsche Bank acquired the property at the foreclosure sale for a credit
bid of $167,030.15. The Debtors contend that the property then had a market value of $317,000
and an assessed value of $314,000.
have been premised upon significant misrepresentations, on which the Debtors relied to their
detriment, by one or more of the Defendants regarding financial and other terms and conditions
and (b) the foreclosure sale appears not to be in compliance with all of the requirements of
Massachusetts foreclosure law including the obligation to act in good faith and to use reasonable
diligence to protect the interests of the Debtors.4 See BFP v. Resolution Trust Corp., 511 U.S.
531, 546 (1994); Williams v. Resolution GGF OY, 417 Mass. 377, 382-83 (1994); In re Strayton,
360 B.R. 8, 11 (Bankr. D. Mass. 2007).
The Court further finds that, on the facts thus far presented, the Debtors are reasonably likely
to prevail on their contentions; that the Debtors will suffer irreparable harm if the requested
injunctive relief is not granted; that such harm to the Debtors outweighs any harm which
granting such injunctive relief will inflict on the Defendants; and that the public interest is better
served by such grant. See Gately v. Massachusetts, 2 F. 3d 1221, 1224 (1st Cir. 1993).
Accordingly, the Court hereby ORDERS that the Defendants, and their agents, owners,
employees and assigns are hereby enjoined until further order of the Court from taking any
action in respect of the Agreement and its underlying judgment for possession including any
action to obtain possession of the subject property or to interfere with the Debtors’ possession
and enjoyment thereof.
Date: November 30, 2007 	_______________________________
Robert Somma
United States Bankruptcy Judge
cc: Robert Cabana, Esq., Counsel to Debtors
Victor Manougian, Esq., Counsel to AMC Mortgage Services, Inc.
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