Deutsche Bank National Trust Company, as Trustee for Registered Holders of Ameriquest Mortgage Securities, Inc. Asset-Backed Pass-Through Certificates 2004-R11 v. John A. McDonough, Jr.
160 A.3d 306
| R.I. | 2017Background
- McDonough executed two mortgage loans in 2004: one on 26-28 Arnold Street (Arnold Street note/mortgage) and one on Woodland Court; the Arnold Street mortgage record included an exhibit that mistakenly described the Woodland Court property.
- In July 2006 a certificate of satisfaction referencing the Woodland Court loan was recorded and—by error—appeared to discharge the Arnold Street mortgage; plaintiff later recorded an affidavit of scrivener’s error, a confirmatory assignment (2008), a notice of rescission (2009), and a revocation of the certificate (2009) to reinstate the Arnold Street mortgage.
- Plaintiff (Deutsche Bank, as trustee) sued in 2012 seeking declaratory relief, reformation, equitable recognition of a mortgage on Arnold Street, and subrogation; defendant counterclaimed that plaintiff lacked standing/holder status and that Arnold Street was unencumbered.
- At summary judgment plaintiff produced the original note endorsed in blank, affidavits from a loan analyst and counsel, and the confirmatory assignment; depositions of the document custodian confirmed receipt of the original note endorsed in blank.
- The Superior Court granted summary judgment for plaintiff, holding Deutsche Bank was holder of the endorsed note, the mortgage was a valid first-priority lien, the erroneous discharge should be set aside in equity, and the note remained unpaid; the Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Arnold Street note was endorsed to plaintiff | The original note was produced and is endorsed in blank; custodian testimony confirms receipt | Defendant points to two copies from bankruptcy that allegedly show no endorsement | Court held the original note was endorsed in blank; defendant offered no competent evidence to create a factual dispute |
| Whether the mortgage assignment to plaintiff was valid | A recorded confirmatory assignment (Aug 12, 2008) transferred all right, title, interest from Ameriquest to Deutsche Bank | Defendant argued Ameriquest had previously sold the mortgage and thus had no interest to assign | Court held the confirmatory assignment was effective; defendant failed to present specific evidence to controvert assignment |
| Whether the erroneous certificate of satisfaction discharged the mortgage or should be set aside | Plaintiff: the discharge was recorded in error; notice of rescission and revocation restore the mortgage; equity permits setting aside mistaken discharges | Defendant: (implicitly) relied on recorded discharge and challenged corrective documents/chain of title | Court held equity required setting aside the erroneous discharge and reinstating the mortgage |
| Whether summary judgment was appropriate given record evidence | Plaintiff: no genuine issue of material fact; entitled to judgment as matter of law | Defendant: raised multiple factual/standing issues requiring trial | Court held summary judgment proper after viewing admissible evidence in light most favorable to defendant; defendant failed to meet burden to show material factual disputes |
Key Cases Cited
- High Steel Structures, Inc. v. Cardi Corp., 152 A.3d 429 (R.I. 2017) (standard of review for summary judgment)
- Genao v. Litton Loan Servicing, L.P., 108 A.3d 1017 (R.I. 2015) (nonmoving party burden to show element essential to case)
- McGovern v. Bank of America, N.A., 91 A.3d 853 (R.I. 2014) (opposing party must present substantial competent evidence to create factual dispute)
- Progressive Consumers Fed. Credit Union v. United States, 79 F.3d 1228 (1st Cir. 1996) (equity supports setting aside mistaken mortgage discharges)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard regarding genuine issues of material fact)