Fryzel v. Mortgage Electronic Registration Systems, Inc.
719 F.3d 40
1st Cir.2013Background
- Defaulted Rhode Island mortgagors challenge foreclosures via invalid assignments; MERS often appears as the assignor/foreclosing party and is the focus of standing to foreclose.
- Mortgagees sought stays and a mandatory mediation process; district court issued successive stays limiting foreclosures and appointing a Special Master.
- District court orders stay foreclosures and restricts judicial action, aiming to facilitate mediation rather than immediate foreclosure.
- Court proceedings involve removal and consolidation of numerous state-court foreclosure actions into federal court; issues include standing and the effect of the stay on foreclosures.
- Mortgagors assert lack of standing to challenge assignments and lack of notice/hearing under Rule 65; mortgagees argue the orders are proper injunctions and within the court’s authority.
- The First Circuit remands to hold prompt hearings with notice and to set time/expense limits if mediation remains, clarifying Rule 65 and continuance conditions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the stay order is an injunction subject to Rule 65 notice | Mortgagors contend stay is not an injunction and lacked notice. | Mortgagees contend stay functions as an injunction preventing non-judicial foreclosure. | Stay is an injunction; lack of notice violated Rule 65(a)(1). |
| Whether the district court properly analyzed standing and related issues | Mortgagors argue standing to challenge assignments and presumptions of no standing. | Mortgagees rely on lack of standing issues to dismiss claims. | Court erred by not addressing standing; remand to address merits and standing. |
| Whether mediation orders required time and cost limits | Mediation terms should be bounded to prevent undue delay. | Mandatory mediation is appropriate without specific limits at this stage. | Omission of safeguards on time/costs was error; set limits on remand. |
| Whether pendent jurisdiction supports review of mediation with injunction | Pendency of injunction supports review of mediation order. | Jurisdiction limited to injunction; mediation incidental. | Pendency doctrine supports reviewing both orders under the injunction’s umbrella. |
Key Cases Cited
- Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988) (contextualizes injunction vs. stay distinctions)
- Manchester Knitted Fashions, Inc. v. Amalgamated Cotton Garment & Allied Indus. Fund, 967 F.2d 688 (1st Cir. 1992) (distinguishes injunction from stay by effect and terms)
- Bogosian v. Woloohojian Realty Corp., 923 F.2d 898 (1st Cir. 1991) (an injunction imposes obligations with consequences; stay analyzed accordingly)
- TEC Eng’g Corp. v. Budget Molders Supply, Inc., 82 F.3d 542 (1st Cir. 1996) (outline Rule 65(a)(1) notice and likelihood of success requirements)
- In re Atl. Pipe Corp., 304 F.3d 135 (1st Cir. 2002) (mediation with safeguards; standard of review for mediation orders)
- In re All. Pipe Corp., 304 F.3d 135 (1st Cir. 2002) (review of mediation orders; need for reasonable time/cost controls)
- Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282 (1st Cir. 2013) (background on MERS structure/role and procedural focus of appeal)
- Limone v. Condon, 372 F.3d 39 (1st Cir. 2004) (pendency/connectedness of orders enabling review)