Cuomo v. U.S. Bank NA
1:17-cv-00485
D.R.I.Aug 21, 2018Background
- Plaintiff Stephen B. Cuomo executed a $292,000 mortgage in 2006 on West Warwick, RI property; foreclosure sale occurred May 3, 2017.
- Four assignments of the mortgage exist: T&C → Ameriquest (2008), Ameriquest → MERS (2008), MERS → Chase (2014), Chase → U.S. Bank (2014); all were recorded and are not alleged to be improperly executed.
- The first two 2008 assignments were recorded minutes apart in the West Warwick Land Records in reversed order (Ameriquest→MERS recorded before T&C→Ameriquest). Plaintiff alleges that sequence renders the chain void.
- Count II seeks declaratory relief that all assignments are void (so U.S. Bank never had authority to foreclose), restoration of title, and damages; Chase moved to dismiss under Fed. R. Civ. P. 12(b)(1) and (6).
- Magistrate Judge Sullivan found Plaintiff has prudential standing to challenge assignments that would be void (not merely voidable) but concluded the legal premise is wrong as a matter of Rhode Island law and granted Chase’s motion to dismiss Count II without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge assignments | Cuomo says the recording sequence shows Ameriquest never had a transferable interest, so assignments (including MERS→Chase) are void and he may challenge them | Chase contends Cuomo lacks standing to challenge alleged procedural defects in assignments that are at most voidable | Court: Cuomo has standing because he alleges assignments are void (not merely voidable), which, if proven, would negate assignee’s right to foreclose |
| Legal effect of recording sequence | Cuomo argues recordings out of chronological execution order render the Ameriquest→MERS assignment (and downstream assignments) void | Chase argues recording order does not invalidate otherwise properly executed assignments; recording affects priority/notice, not validity | Court: Under RI law and persuasive authority, recording sequence does not void properly executed assignments; claim fails as a matter of law |
| Sufficiency of claim under Rule 12(b)(6) | Cuomo alleges facts about recording order sufficient to plead invalid chain of title | Chase argues plaintiff’s legal theory is incorrect and thus complaint fails to state a plausible claim | Court: Claim rests on incorrect legal premise; Count II fails Rule 12(b)(6) and is dismissed |
| Leave to amend | Plaintiff implicitly seeks to proceed on Count II | Chase argues dismissal should be with prejudice as claim is legally deficient | Court: Dismissal without leave to amend because failure is legal, not factual |
Key Cases Cited
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir.) (mortgagors may challenge assignments that are void, not merely voidable)
- Mruk v. Mortgage Electronic Registration Sys., Inc., 82 A.3d 527 (R.I.) (mortgagor lacks standing to challenge assignments that are voidable but otherwise effective to pass title)
- Cruz v. Mortgage Electronic Registration Sys., Inc., 108 A.3d 992 (R.I.) (distinguishes void from voidable assignments)
- Moura v. Mortgage Electronic Registration Sys., Inc., 90 A.3d 852 (R.I.) (assignment may be voidable for procedural defects such as robo-signing)
- U.S. Bank Nat’l Ass’n v. Ibanez, 941 N.E.2d 40 (Mass.) (recording delay or confirmatory assignments do not necessarily render title defective)
- In re Cascella, 1 B.R. 479 (Bankr. D.R.I.) (under RI law, date of execution controls; recording relates back to execution date)