7 F. Supp. 3d 169
D.R.I.2014Background
- Clark executed a 2004 mortgage naming Equity One as lender and MERS as mortgagee “solely as nominee” and later stopped paying; MERS recorded an assignment of the mortgage to Bayview in 2012.
- Clark sued MERS and Bayview seeking declaratory relief, quiet title, and punitive damages, alleging the MERS→Bayview assignment was void (invalid signature/no authority, no recorded power of attorney, robo-signing), that the note/mortgage were not held by the same entity, lack of required notice, and that the loan was satisfied.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6); the court considered whether to convert to summary judgment but decided to apply the 12(b)(6) federal plausibility standard (Twombly/Iqbal).
- Central legal question: whether Clark (a mortgagor and non-signatory to the assignment) had standing to challenge the assignment — specifically whether his allegations alleged a void assignment (giving standing) or merely voidable defects (no standing).
- The court applied First Circuit and Rhode Island precedent on the void/voidable distinction (e.g., Culhane, Wilson, Mruk) and evaluated Clark’s factual pleadings against that standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge assignment | Clark: assignment from MERS→Bayview is void; thus Clark can challenge foreclosure | Defendants: allegations at best show voidable defects; Clark lacks standing | Held: Clark lacks standing — pleadings allege only voidable defects, not a void assignment |
| Authority / signature (Briggs) | Clark: Briggs lacked authority (not VP/Asst Sec), signature invalid/robo-signed, no recorded POA | Defendants: assignment names MERS as assignor and Briggs as Assistant Secretary; defects are voidable and curable by MERS/assignor | Held: signature/authority allegations, robo-signing and missing POA are at most voidable; not sufficient to plead a void assignment or confer standing |
| Requirement that note and mortgage be held by same entity | Clark: assignment void because assignor did not hold both note and mortgage | Defendants: MERS may act as nominee/agent; separation of legal and beneficial interests is permissible | Held: rejected Clark’s argument; Rhode Island and First Circuit precedent allow MERS framework; no basis for voidness |
| Notice, satisfaction, fraud, quiet title | Clark: defendants failed mortgage notice/acceleration, loan satisfied, and committed fraud | Defendants: pleadings lack factual particularity and fail to tie omissions to Bayview/MERS | Held: notice and satisfaction allegations are conclusory and implausible; fraud pleadings fail Rule 9(b); quiet title and punitive claims dismissed |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state plausible claim to survive dismissal)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (conclusory allegations insufficient under Fed. R. Civ. P. 12(b)(6))
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (mortgagor has standing only when assignment alleged to be void, not merely voidable)
- Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) (procedural infirmities in assignment do not confer standing)
- Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1 (1st Cir. 2014) (explains void vs. voidable distinction; only void assignments deprive alleged assignee of mortgagee status)
- Bucci v. Lehman Bros. Bank, N.A., 68 A.3d 1069 (R.I. 2013) (MERS and its assigns can foreclose when acting as agent; note and mortgage need not be held by one entity)
- Mruk v. Mort. Elec. Registration Sys., Inc., 82 A.3d 527 (R.I. 2013) (adopts Culhane void/voidable framework for Rhode Island law)