Lister v. Bank of America, N.A.
2015 U.S. App. LEXIS 9869
1st Cir.2015Background
- In 2006 Lister refinanced her Lincoln, RI home with Mortgage Lenders Network (MLN); she alleges the note/mortgage were not properly executed and that MLN later filed bankruptcy.
- After MLN’s bankruptcy, Lister routed payments to Bank of America, then faced foreclosure notices from Countrywide and collection activity by Harmon Law; foreclosure was later put on hold.
- Plaintiffs (Lister and Blais) sued multiple potential mortgagees seeking interim relief (sale and escrow of proceeds), quiet title (to nullify the note/mortgage), and credit relief (declare no debt/remove derogatory reports).
- Defendants attached executed copies of the note/mortgage and other land records; district court dismissed for failure to state a claim, focusing on quiet-title as dispositive.
- On appeal the First Circuit affirmed dismissal, holding plaintiffs failed to plead an adverse interest under Rhode Island quiet-title law because the mortgagor–mortgagee relationship is not inherently adverse.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint plausibly pleads adverse interest necessary for a Rhode Island quiet-title action | Lister: uncertainty over who holds the mortgage (and inability to produce original loan documents) clouds title and supports quiet-title relief | Defendants: mortgagee holds legal title (title-theory state); mortgagor retains equitable title — interests are complementary, not adverse | Court: Dismissed — plaintiffs failed to plead the requisite adverse interest; mortgagor and mortgagee interests are not adverse under RI law |
| Whether inability to produce original note renders note unenforceable or clouds title | Lister: destroyed/absent documents mean the note is unlikely to exist and thus unenforceable | Defendants: Rhode Island law does not convert lack of production into unenforceability; documents attached contradict plaintiff’s assertion | Court: Rejected plaintiff’s production-based theory; failure to produce originals does not, by itself, create a plausible quiet-title claim |
| Whether federal pleading standard or Rhode Island’s quieter statutory standard governs in federal court | Lister: argued for Rhode Island’s lower pleading standard for quiet-title | Defendants: Federal Rule 12(b)(6) standard applies in federal diversity cases | Court: Applied federal Twombly/Iqbal standard; state pleading leniency inapplicable in federal court |
| Whether discovery should have been allowed before dismissal | Lister: sought discovery to develop facts about chain of title | Defendants: Complaint lacks plausible factual allegations sufficient to survive 12(b)(6) | Court: Denied need for discovery — even with discovery, plaintiffs failed to state a plausible claim |
Key Cases Cited
- Grajales v. P.R. Ports Auth., 682 F.3d 40 (1st Cir. 2012) (standard for considering incorporated documents on a motion to dismiss)
- Lemelson v. U.S. Bank Nat'l Ass'n, 721 F.3d 18 (1st Cir. 2013) (mortgagor and mortgagee interests are not adverse for quiet-title purposes)
- Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1 (1st Cir. 2014) (review standards for Rule 12(b)(6) dismissals and consideration of public records)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard)
- Andresen v. Diorio, 349 F.3d 8 (1st Cir. 2003) (federal pleading standards control in federal court)
- Bucci v. Lehman Bros. Bank, FSB, 68 A.3d 1069 (R.I. 2013) (Rhode Island as a title-theory state)
- Bevilacqua v. Rodriguez, 955 N.E.2d 884 (Mass. 2011) (discussion of split legal and equitable title under the title-theory of mortgages)