BOSTON A developer who acquired property in a faulty transfer cannot sue the original owner, Massachusetts' highest court ruled on Tuesday, the second time it has sided with a homeowner in a high-profile housing case this year.
The decision by the state's Supreme Judicial Court turned on technical reasons and left the developer facing the prospect of suing banks and title companies that had left him with faulty documentation, rather than the original homeowner.
The result could make it easier for individuals to fend off financial companies in similar cases elsewhere, said an attorney who had argued against the developer's case.
"The banks are the ones that violated the law, so why should homeowners have to pay for the violations?" said Max Weinstein, an attorney and Harvard Law School lecturer who had filed a friend-of-the-court brief on behalf of the homeowner.
An attorney for the developer, Francis Bevilacqua, did not immediate return messages.
Housing industry executives had previously warned a ruling against Bevilacqua could destabilize the real-estate finance system.
SECOND CASE FOR COURT
In January, the state's highest court voided the seizure of two homes by Wells Fargo & Co (WFC.N) and US Bancorp (USB.N) after they failed to show they held titles at the time of the foreclosures.
Issues of foreclosures done without proper documentation have flared up nationwide as banks and regulators grapple with the aftermath of the housing boom and the loose oversight that accompanied it.
In this case, banks and mortgage companies had lined up behind the developer, while state officials and housing activists had cited his claims as examples of a flawed system.
The matter began when US Bancorp transferred to Bevilacqua the title for a building in Haverhill, Massachusetts, a suburb north of Boston. He turned it into four condominiums.
In a bid to establish clear title, Bevilacqua sued the previous owner who had been foreclosed upon. But a lower court ruled that Bevilacqua did not hold title to the property and said his lawsuit would be better directed at those that gave him the faulty title.
The original owner and defendant in the suit, Pablo Rodriguez, has not appeared at hearings or filed motions in the case.
The Supreme Judicial Court upheld the lower court ruling dismissing Bevilacqua's lawsuit, but left the door open for him to refile his lawsuit in a different form.
The case in the Supreme Judicial Court of Massachusetts is Francis J. Bevilacqua III vs. Pablo Rodriguez, SJC-10880.
(Reporting by Ross Kerber in Boston, editing by Matthew Lewis)