Dеsmond A. LEONE v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS et al.
No. 2013-59-Appeal.
Supreme Court of Rhode Island.
Oct. 20, 2014.
869 A.3d 869
William M. Walsh, Esq., Warwick, for Defendant.
Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.
OPINION
Justice FLAHERTY, for the Court.
The plaintiff, Desmond A. Leone, appeals from summary judgment entered against him and in favor of the defendants Mortgage Electronic Registration Systems (MERS),1 Equity One, Inc. (Equity One), and Assets Recovery Center Investments, LLC (ARC). This case came before the Supreme Court for oral аrgument on September 24, 2014, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. After hearing the arguments and examining the memoranda filed by the parties, we are of the opinion that cause hаs not been shown, and we proceed to decide the appeal at this time, 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 December 8, 2006, plaintiff Desmond Leone borrowed the sum of $241,000 from Equity One pledging the home he had owned since 1998 as collateral.2 Equity
On April 24, 2009, Equity One executed a notarized limited power of attorney enabling ARC to act on its behalf. ARC‘s power of attornеy extended to the Leone mortgage that it purchased from Fulcrum Chicago Corporation (Fulcrum).3 The power of attorney authorized ARC to act on behalf of the successor to Leone‘s note and “use or take any lawful means for recovery by legal process * * * and generally, to do and perform any and all things necessary and appropriate in connection with the [loan sale agreement].”
On April 27, 2009, MERS assigned its interest in the Leone mortgage to ARC via an assignment of mortgage. That assignment was recorded in the Land Evidence Records for thе Town of Johnston on December 4, 2009. Unfortunately, Leone failed to make timely payments to the lender. As a result of Leone‘s default with respect to his obligations, ARC initiated foreclosure proceedings. In November of 2009, the property was sold at a foreclosure sale conducted by ARC.
On February 5, 2010, Leone filed an action for declaratory relief in Providence County Superior Court. His complaint sought a declaration that the assignment from MERS to ARC was invalid, and it also sought to quiet title to the property. On October 21, 2010, defendants, without having filed an answer to plаintiff‘s complaint, filed a motion to dismiss the complaint under
On April 12, 2012, the hearing justice issued a written decision after having considered materials outside of the pleadings.
II
Standard of Review
When ruling on a motion to dismiss,
When a
III
Discussion
On appeal, plaintiff advances a number of arguments. First, plaintiff contests the hearing justice‘s conversion of the motion to dismiss to a motion for summary judgment. He argues that the complaint would have survived a motion to dismiss. The plaintiff contends that summary judgment, even if properly converted, was nonetheless incorrectly granted to defendants. The plaintiff posits that the assignment of the mortgage from MERS to ARC was invalid, that the foreclosure by ARC was improper, and that the hearing justice improperly relied on other Superior Court decisions. Wе conclude that these arguments are without merit and we will address them in turn.
A. Conversion of Rule 12(b)(6) Motion
The plaintiff first argues that the conversion of defendants’
A motion to dismiss under
“[i]f on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material mаde pertinent to such motion by Rule 56.” (Emphasis added.)
Here, both parties presented materials that had not been included or attached to the verified complaint when they filed their memoranda in support of and opposition to defendants’ motion to dismiss. The defendants includеd the note that plaintiff had signed when he executed the mortgage and the limited power of attorney that bestowed the rights of the note holder on ARC. In his reply, plaintiff submitted a consent order from several federal agencies that pertained to the practices of MERS in the mortgage market. The hearing justice, in his sound discretion, considered those documents in addition to the pleading and “[u]nder these circumstances, conversion of the dismissal motion to one for summary judgment was automatic under the rules.” Bowen Court Associates v. Ernst & Young, LLP, 818 A.2d 721, 726 (R.I. 2003). Indeed, a party who supplies matters outside of the pleadings to a judge who is considering a motion to dismiss cannot complain of a lack of notice that such materials would be considered and a conversion to a motion for summary judgment would result. See Ingram v. Mortgage Electronic Registration Systems, Inc., 94 A.3d 523, 527 (R.I. 2014) (citing Ouimette v. Moran, 541 A.2d 855, 856 (R.I. 1988)).
The parties disagree on whether the hearing justice advised the parties that he would consider the additional documents that were submitted to him. However, no transcript of that hearing was provided to this Court. “[T]he deliberate decision to prosecute an appeal without providing the Court with a transcript of the proceedings in the trial court is risky business.” Sentas v. Sentas, 911 A.2d 266, 270 (R.I. 2006) (quoting 731 Airport Associates, LP v. H & M Realty Associates, LLC, 799 A.2d 279, 282 (R.I. 2002)). Nоnetheless, the submission of additional materials outside the pleadings is sufficient to constitute notice. Ingram, 94 A.3d at 527. Further, in the absence of a documented request by plaintiff to exclude such materials, we can discern no error in the hearing justice‘s action. Both parties submitted materials outside the pleadings for the hearing justice to consider before he ruled on the motion to dismiss. Accordingly, we are satisfied that plaintiff was not denied notice or the opportunity to present additional material and that the Superior Court justice properly converted the mоtion to dismiss to one for summary judgment.
B. Motion for Summary Judgment
The plaintiff next argues that the hearing justice erred when he determined that no genuine dispute of material fact
“Summary judgment is appropriate when no genuine issue of material fact is evident from ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any,’ and the motion justice finds that the moving pаrty is entitled to prevail as a matter of law.” Swain v. Estate of Tyre ex rel. Reilly, 57 A.3d 283, 288 (R.I. 2012) (quoting Beacon Mutual Insurance Co. v. Spino Brothers, Inc., 11 A.3d 645, 648 (R.I. 2011)). The plaintiff has failed to meet his burden of showing the existence of a disputed issue of material fact. In our opinion, the authority of MERS, as named mortgagee, to foreclose or to assign the mortgage are questions of law, not questions of fact to be determined by the hearing justice. Mruk v. Mortgage Electronic Registration Systems, Inc., 82 A.3d 527, 532 (R.I. 2013). In so concluding, we note that we do not write on a blank slate and that we have addressed the issues raised by plaintiff in previous opinions. See Mruk, 82 A.3d at 532; Bucci v. Lehman Brothers Bank, FSB, 68 A.3d 1069, 1085 (R.I. 2013).
The plaintiff argues that MERS lacks the statutory power of sale because it held the mortgage only as nominee of the lender, Equity One, but this argument is without merit. In a case where the mortgage used identical language to the one in question, this Court held that MERS was the mortgagee with statutory power of sale. See Bucci, 68 A.3d at 1085. Here, as in Bucci, the mortgage language said, “[b]orrower does hereby mortgage, grant and convey to MERS, (solely as nominee for Lender and Lender‘s successors and assigns) and to the successors and assigns of MERS, with Mortgage Covenants upon the Statutory Condition and with the Statutory Power of Sale * * *” Id. at 1081. When plaintiff executed the mortgage containing this explicit language, he gave to MERS the contractual authority to exercise its right to foreclose.
Further, plaintiff argues that MERS did not validly assign the mortgage to ARC because it did not hold the note, but again, this Court has disposed of this argument. In a similar case, we have held that MERS, as mortgagee and nominee of the lender, could validly assign the mortgage and invest its assignee with the statutory power of sale. Mruk, 82 A.3d at 537. In Mruk, MERS assigned its interest in the mortgage to the Federal National Mortgage Association (FNMA), which later began foreclosure proceedings. Id. at 530-31. We held that, based on the reasoning in Bucci, the same entity need not hold the mortgage and the note, MERS was а valid mortgagee despite not holding the note, and its assignment to FNMA was therefore consistent with Rhode Island law. Mruk, 82 A.3d at 537. Similarly, the assignment of Leone‘s mortgage to ARC was valid because MERS was the mortgagee and nominee for the original lender, Equity One and its successors and assigns. Upon the execution of the assignment, ARC held the statutory power of sale with the ability to foreclose.
The plaintiff next argues that the power of attorney that was issued to ARC by the note‘s named lender, Equity One, is invalid or not authentic. The hearing justice accepted its authenticity and found that it
With respect to the remaining essential facts, the plaintiff does not show the existence of a genuine dispute; “[o]nce ‘the moving party establishes grounds for [summary] judgment, the opposing party, who counters that there is a material factual dispute, * * * must set forth specific facts that would constitute a genuine issue for resolution at trial.’ ” McGovern v. Bank of America, N.A., 91 A.3d 853, 858 (R.I. 2014) (quoting Riel v. Harleysville Worcester Insurance Co., 45 A.3d 561, 570 (R.I. 2012)). In his filings, thе plaintiff never disputed that he was in default of his obligations under the promissory note, never disputed the mortgage deed and assignment, which he included with his verified complaint, and accepted that the note provided by the defendants was an accurate copy. Accordingly, we agree with the hearing justice that no genuine issues of material fact existed and that the matter was ripe for summary judgment in favor of the defendants.
IV
Conclusion
For the reasons set forth above, the judgment of the Superior Court is affirmed and the record may be remanded thereto.