Christоpher REYNOLDS v. FIRST NLC FINANCIAL SERVICES, LLC, et al.
No. 2012-113-Appeal.
Supreme Court of Rhode Island.
Jan. 10, 2014.
1111
In so holding, we emphasize as well that the Tribe does not need to have alleged that its loss in income from the removal of the machines will be a substantial one. As we have previously stated, the requirement for standing is оnly that plaintiffs have suffered an injury, not that the injury be substantial. See Pontbriand, 699 A.2d at 862. We note, however, that the loss of some 200 VLT machines as individual sources of income is not a trivial one. While the lure of the table games at Twin River might cause some new patrons to also try their luck at the VLT machines, these new patrons will have significantly fewer machines at which they might play.
The Tribe urges this Court to find, as did the hearing justice, that the instant matter also involves a question of substantial public interest. We note that this Court has generally been reluctant to invoke the public interest exception, which is reserved for rare circumstances. See Watson, 44 A.3d at 138; In re Review of Proposed Town of New Shoreham Project, 19 A.3d 1226, 1229 (R.I.2011) (mem.). Accordingly, because we hold that the Tribe has demonstrated an injury in fact, we need not, and do not, reach the question of whether this qualifies within the public interest exception to standing. In so doing, we exercise our prerogative of affirming the hearing justice‘s finding for a different reason. See Levine v. Bess Eaton Donut Flour Co., 705 A.2d 980, 984 (R.I. 1998) (holding that the Supreme Court can affirm a trial justice‘s decision for reasons other than those relied upon by the trial justice).
IV
Conclusion
For the foregoing reasons, we hold that the Tribe was entitled to bring its claims challenging the Casino Acts. Accordingly, the judgment of the Superior Court finding that the Tribe had standing is affirmed. The record in this case will be retained by this Court so that thе Tribe may proceed in its cross-appeal of the Superior Court‘s grant of partial summary judgment in favor of the defendants.
Justice GOLDBERG did not participate.
Keven A. McKenna, Esq., Providence, for Plaintiff.
Mark E. Liberati, Esq., Providence, Charles C. Martorana, Esq., Pro Hac Vice, for Defendant.
Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.
OPINION
Justice FLAHERTY, for the Court.
In a fairly typical mortgage transaction, the plaintiff, Christopher Reynolds, executed a promissory note, secured by a mortgage on his property. Unfortunate
This case came before the Supreme Court on October 29, 2013, pursuant to an order directing the parties to show cause why the issues raised in this appeal should not summarily be decided. We have considered the reсord and the written and oral submissions of the parties, conclude that cause has not been shown, and proceed to decide the appeal without further briefing or argument. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.
I
Facts and Travel
On August 25, 2006, plaintiff, Christopher Reynolds, obtained a mortgage on his home at 41 Medway Street, Providence (the property). During the course of that transaction, Reynolds signed a $320,000 promissory note in favor of defendant First NLC Financial Services, LLC (First NLC), and granted a mortgage to defendant Mortgage Electronic Registration Systems (MERS), “acting solely as a nominee for [First NLC] and [First NLC]‘s successors and assigns.”1 The note evi
“only legаl title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for [First NLC] and [First NLC]‘s successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of [First NLC] including, but not limited to, releasing and canceling this Security Instrument.”
In an assignment that was executed on March 9, 2009, MERS assigned its interest in the mortgage to defendant Deutsche Bank National Trust Company, as Trustee for Morgan Stanley IXIS Real Estate Capital Trust 2006-2 (Deutsche Bank). At the same time, the note was endorsed in blank and transferred to Deutsche Bank.
Because Reynolds had defaulted on his obligations under the note, foreclosure proceedings commenced. Reynolds then filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for thе District of Rhode Island. In due course, Deutsche Bank filed a motion for relief from the automatic stay that is imposed by
A foreclosure sale was held on February 1, 2010, and defendant Guy Settipane was the highest bidder. That same day, plaintiff filed another bankruptcy petition in the
Reynolds then filed an action in Superior Court seeking: (1) a declaration that the foreclosure deed was void, and (2) an order quieting title and declaring that he owned the property in fee simple absolute. Deutsche Bank and Settipane filed motions for summary judgment, which the Superior Court granted based on the doctrine of res judicata, and a final judgment was entered. It is from thаt judgment that plaintiff seeks relief from this Court.
II
Standard of Review
“It is well established that this Court reviews a trial justice‘s decision to grant summary judgment de novo, ‘employing the same standards and rules used by the [trial] justice.‘” Inland American Retail Management LLC v. Cinemaworld of Florida, Inc., 68 A.3d 457, 461 (R.I. 2013) (quoting Empire Fire and Marine Insurance Companies v. Citizens Insurance Co. of America/Hanover Insurance, 43 A.3d 56, 59 (R.I.2012)). Thus, if, “after viewing the evidence in the light most favorable to the nonmoving party, [we conclude] that there is no genuine issue of material fact to be decided and that the moving party is entitled to judgment as a matter of law,” we will affirm the judgment. Id. (quoting Empire Fire and Marine Insurance Companies, 43 A.3d at 59).
III
Discussion
Res judicata, or claim preclusion, “bars the relitigation of all issues that ‘were tried or might have been tried’ in an earlier action.” Huntley v. State, 63 A.3d 526, 531 (R.I.2013) (quoting Bossian v. Anderson, 991 A.2d 1025, 1027 (R.I.2010)). “Usually asserted in a subsequent action based upon the same claim or demand, the doctrine precludes the relitigation of all the issues that were tried or might have been tried in the original suit,” as long as there is “(1) identity of parties, (2) identity of issues, and (3) finality of judgment in an earlier action.” E.W. Audet & Sons, Inc. v. Fireman‘s Fund Insurance Co. of Newark, New Jersey, 635 A.2d 1181, 1186 (R.I. 1994) (citing Gaudreau v. Blasbalg, 618 A.2d 1272, 1275 (R.I.1993); Providence Teachers Union, Local 958, American Federation of Teachers, AFL-CIO v. McGovern, 113 R.I. 169, 172, 319 A.2d 358, 361 (1974)).
Determining whether there is “identity of parties” requires resolving “whether the parties to this second action are identiсal to or in privity with the parties involved in the [prior action].” E.W. Audet & Sons, Inc., 635 A.2d at 1186 (citing Gaudreau, 618 A.2d at 1275; Providence Teachers Union, 113 R.I. at 172, 319 A.2d at 361). “A party to an action has been defined as ‘[a] person who is named as a party to an action and subjected to the jurisdiction of the court * * *‘” Id. at 1186-87 (quoting 1 Restatement (Second) Judgments § 34(1) at 345 (1982)). Rely
The second requirement necessary to apply the doctrine of res judicata is “identity of issues.” Lennon, 901 A.2d at 592. “In determining the scope of the issues to be precluded in the second action, we have adopted the broad ‘transаctional’ rule.” Id. (quoting Waters v. Magee, 877 A.2d 658, 666 (R.I.2005)). In accordance with that rule, res judicata “precludes the relitigation of ‘all or any part of the transaction, or series of connected transactions, out of which the [first] action arose.‘” Id. (quoting Waters, 877 A.2d at 666).
Finally, the application of res judicata requires that there be “finality of judgment in the earlier action.” Huntley, 63 A.3d at 531 (quoting Bossian, 991 A.2d at 1027). “The burden is upon the party asserting res judicata to ‘prove that the prior judgment on which it is relying was final.‘” Id. at 532 (quoting 47 Am.Jur.2d Judgments § 648 at 222 (2006)).
In DiSaia v. Capital Industries, Inc., 113 R.I. 292, 298, 320 A.2d 604, 607 (1974), we considered whether res judicata precluded a party from relitigating in state court issues that had already been litigated in United States Bankruptcy Court. We said that, to apply res judicata, “it must be shown that either the matter controverted in the second action was raised and litigated in the [earlier] proceedings * * * or that the matter, if not raised, was one which could and should have been brought forward and litigated.” Id. (quoting 3 Collier, Bankruptcy ¶ 57.14[7] at 221-23 (14th ed. 1974)). In that case, a claim had been disallowed in the bankruptcy proceeding, the federal district court entered an order of confirmation, and we held that res judicata precluded the relitigation of the matter in a state court proceeding. Id.
Applying those principles to the case before us, there can be little doubt that there is identity of the pаrties, as Reynolds was the debtor in the bankruptcy proceedings, thereby voluntarily subjecting himself to the jurisdiction of the bankruptcy court. Also, Deutsche Bank filed the motion for relief from the stay, the granting of which is the focus of this case. Settipane purchased the property at the foreclosure sale and received title to the property from Deutsche Bank by means of a foreclosure deed that wаs recorded on May 14, 2010. Settipane‘s purchase of the property places him in privity with Deutsche Bank, which “sufficiently represent[ed]” Settipane‘s interest when it sought relief from the stay prior to the foreclosure sale in the Chapter 7 case and also sought retrospective relief from the stay after the sale to Settipane in the Chapter 13 case. See Lennon, 901 A.2d at 591 (quoting Duffy, 896 A.2d at 36).
Similarly, the issues were the same in the bankruptcy proceedings and in the Superior Court. Motions for relief from the stay were considered in both the Chapter 7 proceeding and the Chapter 13 proceeding. In his objection to the latter motion, Reynolds said that relief from the stay was improper because Deutsche Bank‘s “claim [wa]s based on a defective title resulting from an unauthorized MERS assignment of mortgage,” and because Deutsche Bank “d[id] not рossess the mortgage note and
It is our opinion as well that the judgment on which Deutsche Bank and Settipane rely was final for res judicata purposes. In DiSaia, 113 R.I. at 297, 320 A.2d at 606, we said that if a creditor “was dissatisfied with the order of disallowance, his remedy was by way of an appeal of that order under the Bankruptcy Act.” The same is true here. However, Reynolds did not seek review of the bankruptcy court‘s order that granted ex post relief from the stay in the Chapter 13 bankruptcy and confirmed that the foreclosure sale “was a valid sale, [and] remain[ed] in full force and effect.” The bankruptcy has now concluded, and the decision, unappealed, is final.
Nonetheless, Reynolds argues that the bankruptcy court‘s dеcision to grant relief from the stay was merely procedural in nature and that the issue decided in that proceeding was not the same as the issue being considered in this case. In support of his argument, plaintiff relies on Grella v. Salem Five Cent Savings Bank, 42 F.3d 26, 29 (1st Cir. 1994), a case in which the First Circuit Court of Appeals refused to give preclusive effect to a bankruptcy court‘s decision to grant relief from the automatic stay. We conclude, however, that that case is distinguishable.
In Grella, 42 F.3d at 28, a debtor signed a promissory note in favor of a bank and collaterally assigned promissory notes and mortgages to the bank to secure the debt. The debtor later filed for bankruptcy, and the bank sought and obtained relief from the stay. Id. The bank then sought a determination of the status of its liens, and the bankruptcy trustee raised a preference counterclaim.4 The bankruptcy court ruled thаt the trustee‘s counterclaim was precluded. Id. at 30.
On appeal, the First Circuit held that the bankruptcy court‘s decision to grant relief from the stay “is merely a summary proceeding of limited effect,” which is a “determin[ation of] whether the party seeking relief has a colorable claim to property of the estate.” Grella, 42 F.3d at 33. Relief from the stay “is not a determination of the validity of those claims, but merely a grant of pеrmission from the court allowing th[e] creditor to litigate its substantive claims elsewhere without violating the automatic stay.” Id. at 33-34.
Despite plaintiff‘s arguments to the contrary, however, we do not believe Grella to be persuasive here. First, we note that the foreclosure sale in this case had taken place already when the bankruptcy court entered its order in the Chapter 13 case.
Additionally, the court in Grella, 42 F.3d at 31-32, considered issue preclusion, or collateral estoppel, rather than сlaim preclusion. As that court explained, issue preclusion “bars relitigation of any factual or legal issue that was actually decided in previous litigation ‘between the parties, whether on the same or a different claim.‘” Id. at 30 (quoting Dennis v. Rhode Island Hospital Trust, 744 F.2d 893, 899 (1st Cir. 1984)). The elements of issue preclusion are
“(1) the issue sought to be precluded must be the same as that involved in the prior action; (2) the issue must have been actually litigated; (3) the issue must have been determined by a valid and binding final judgment; and (4) the determination of the issue must have been essential to the judgment.” Id.5
The summary nature of a hearing on a motion for relief from stay may be implicated when applying issue preclusion because that doctrine requires the issue to have been “actually * * * litigated” and “necessarily * * * decided.”6 See E.W. Audet & Sons, Inc., 635 A.2d at 1186 (citing State v. Chase, 588 A.2d 120, 123 (R.I. 1991)). The bank in Grella argued that the bankruptcy court must have found that its security interest was valid because such a finding was a prerequisite to lifting the stay, but the court disagreed, holding that the lien‘s validity was not “actually adjudicated” because obtaining relief from the stay required only a colorable claim. Grella, 42 F.3d at 34. Here, the propriety of the foreclosure was examined by the bankruptcy court after the foreclosure sale had taken place; that court said that the sale was valid, and the bankruptcy later
IV
Conclusion
For the foregoing reasons, the judgment of the Superior Court is affirmed. The case shall be remanded to that court.
STATE v. Christian BUCHANAN.
No. 2012-230-C.A.
Supreme Court of Rhode Island.
Jan. 14, 2014.
Notes
“The following power shall be known as the ‘statutory power of sale’ and may be incorporated in any mortgage by reference:
“(Power)
“But if default shall be made in the performance or observance of any of the foregoing or other conditions, or if breach shall be made of the covenant for insurance contained in this deed, then it shall be lawful for the mortgagee or his, her or its executors, administrators, successors or assigns to sell, together or in parcels, all and singular the premises hereby granted or intended to be granted, or any part or parts thereof, and the benefit and equity of redemption of the mortgagor and his, her or its heirs, executors, administrators, successors and assigns therein, at public auction upon the premises, or at such other place, if any, as may be designated for that purpose in this deed, or in the published notice of sale first by mailing written notice of the time and place of sale by certified mail, return receipt requested, to the mortgagor, at his or her or its last known address, at least twenty (20) days for mortgagors other than individual consumer mortgagors, and at least thirty (30) days for individual consumer mortgagors, prior to first publishing the notice, including the day of the mailing in the computation; second, by publishing the same at least once each week for three (3) successive weeks in a publiс newspaper published daily in the city in which the mortgaged premises are situated; and if there be no public newspaper published daily in the city in which the mortgaged premises are situated * * *.”