Massachusetts Appeals Court Addresses Litigation Privilege in Foreclosure Case

In a recent opinion, the Appeals Court of Massachusetts considered whether the law firm and auction company of a lender were immune from civil liability in an action brought by the borrower for violations of consumer protection statutes and the Massachusetts Civil Rights Act.

In Mack v. Wells Fargo Bank, N.A. (Mass. App. Ct. Dec. 1, 2015), the plaintiff alleged that the defendants continued to advertise and schedule foreclosure actions of her property in violation of a temporary restraining order and a preliminary injunction prohibiting them from doing so. The plaintiff also alleged that the defendants communicated with her with knowledge that she was represented by an attorney and engaged in conduct intending to harass, oppress, or abuse the plaintiff in association with the collection of a debt.

The defendants filed a motion for summary judgment, contending that the litigation privilege immunizes them from civil liability for their actions. The trial court denied the motion, ruling that the defendants’ alleged actions in violating the preliminary injunction were undertaken solely for the purpose of effecting a non-judicial foreclosure and therefore did not fall within the scope of the litigation privilege. The defendants then sought interlocutory review from the appeals court.

In Massachusetts, statements by a party, witness, or counsel during the course of a judicial proceeding are absolutely privileged, provided that such communications are related to that proceeding. The privilege applies when a communication to a prospective defendant relates to a proceeding that is contemplated in good faith or under serious consideration. However, it does not include attorneys’ conduct in advising clients on general business matters. In Mack, the defendants had the burden to prove that their actions in mailing letters to the homeowner, continuing to include the house on their auction website, and appearing on her property to announce postponement of the foreclosure auctions were privileged.

The appeals court noted the auction house was not a party to the judicial proceeding at the time it engaged in the conduct complained of, nor did any evidence on the record support an inference that it undertook such actions in contemplation of being named as a party to the plaintiff’s wrongful foreclosure suit. As a result, the appeals court agreed that the auction house is not protected by the litigation privilege and may be subject to civil liability.

With regards to the law firm defendant, however, the court held that the facts support the application of privilege. Although the court agreed that the law firm’s acts were troubling, if not in violation of ethical rules of professional conduct, the court was obliged to find that the statements and actions of the law firm defendant were those of an attorney engaged in his function as an attorney in the institution or conduct of litigation or in communications preliminary to litigation. The court therefore held that while the law firm was immune to liability, the auction house was not.

If you are facing foreclosure, there are specific details you will need to know in order to determine how to best proceed. The real estate lawyers at Pulgini & Norton offer detail-oriented and client-centered representation in a variety of Massachusetts property transactions, including home closings, inspections, title insurance, and others. To discuss your real estate matter with one of our knowledgeable attorneys, contact us today through our website or by calling (781) 843-2200.

More Blog Posts:

Massachusetts Supreme Judicial Court Finds in Favor of Homeowners, Voids Foreclosure Sale, Massachusetts Real Estate Lawyer Blog, published July 24, 2015

Massachusetts Appeals Court Reverses Summary Judgment, Allows Homeowner to Continue Suit Against Mortgage Company, Massachusetts Real Estate Lawyer Blog, published November 17, 2015

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