214 F. Supp. 3d 163
D.R.I.2016Background
- Martins borrowed in 2007; mortgage recorded with MERS; loan later assigned to Fannie Mae and then to Bank of America and Green Tree. Martins defaulted beginning in 2009.
- Mortgage Paragraph 22 required pre-acceleration notice containing six specific elements (including a date ≥30 days to cure, right to reinstate after acceleration, and right to bring a court action to contest default).
- Green Tree/Harmon sent notices in Feb–Apr 2014: notices identified default and an amount due but did not specify an exact cure deadline, gave ambiguous reinstatement language, and used vague language about bringing defenses in foreclosure.
- A non-judicial power-of-sale foreclosure occurred and Fannie Mae recorded a foreclosure sale; Fannie Mae later moved to set aside/rescinded the non-judicial sale and filed a counterclaim seeking judicial foreclosure under R.I. law.
- Martins sued claiming (1) constitutional due-process and (2) contractual notice violations under Paragraph 22; defendants moved to dismiss as moot after rescission and sought summary judgment on the judicial-foreclosure counterclaim. The court dismissed Martins’ claims as moot but entered summary judgment for Martins on the counterclaim, denying defendants’ summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether rescission of non-judicial foreclosure moots Martins’ claims | Rescission is voluntary cessation; injury may recur so claims not moot | Rescission + pursuit of judicial foreclosure removes live controversy; claims moot | Court: Claims are moot; rescission and pending judicial process remove the live controversy |
| Whether lender must comply with mortgage Paragraph 22 when seeking judicial foreclosure | Paragraph 22 is a contract condition precedent; strict compliance required even for judicial foreclosure | Judicial foreclosure statute does not expressly incorporate mortgage notice provisions; statute controls | Court: Mortgage notice requirements apply; compliance with Paragraph 22 is required regardless of judicial vs non-judicial foreclosure |
| Whether the notices complied with Paragraph 22 (date to cure, reinstatement, right to sue) | Notices failed to specify an exact cure date, gave inadequate reinstatement timing, and did not clearly state right to bring court action | Notices, read together, were sufficient or at least not materially deficient | Court: Notices facially failed to specify exact cure date, failed to provide proper reinstatement notice prior to acceleration, and did not adequately inform Martins of right to bring a court action; therefore noncompliant |
| Remedy: Are defendants entitled to judicial foreclosure? | Martins: Defendants cannot obtain judicial foreclosure because condition precedent (Paragraph 22) not satisfied | Defendants: Entitled to judicial foreclosure; mortgagee may proceed under statute | Court: Denied defendants summary judgment; granted Martins summary judgment on counterclaim and precluded judicial foreclosure due to lack of required notice |
Key Cases Cited
- Aversa v. United States, 99 F.3d 1200 (1st Cir.) (pleading/standing standards for jurisdiction)
- Johansen v. United States, 506 F.3d 65 (1st Cir.) (party invoking jurisdiction must show grounds in pleadings)
- DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (U.S.) (plaintiff bears burden to establish standing)
- Town of Portsmouth v. Lewis, 813 F.3d 54 (1st Cir.) (mootness: live controversy requirement)
- Los Angeles County v. Davis, 440 U.S. 625 (U.S.) (mootness and voluntary cessation doctrine)
- Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (U.S.) (voluntary cessation burden to show no reasonable expectation of recurrence)
- Preiser v. Newkirk, 422 U.S. 395 (U.S.) (injury required to establish standing; speculative harm insufficient)
- Bucci v. Lehman‑Bros. Bank, FSB, 68 A.3d 1069 (R.I.) (power of sale derives from contract; mortgage controls notice requirements)
- Cinq‑Mars v. Travelers Ins. Co., 218 A.2d 467 (R.I.) (contractual notice provisions are condition precedent requiring strict compliance)
- Hedco, Ltd. v. Blanchette, 763 A.2d 639 (R.I.) (failure to specify a precise date in notice defeats notice requirement)
- In re Demers, 511 B.R. 233 (Bankr. D.R.I.) (mortgage notice omitting right to litigate acceleration is fatal)