Jutonus, LLC v. Fiano

• Decision Date: 18 November 2022
• Docket Number: C. A. WM-2022-0091
• Parties: JUTONUS, LLC, Petitioner, v. PAUL FIANO; MARY LOUROSENCRANZ, AND HER UNKNOWN HEIRS; AND PREMIER CAPITAL LLC, Respondents.
• Court: Rhode Island Superior Court

JUTONUS, LLC, Petitioner,
v.
PAUL FIANO; MARY LOUROSENCRANZ, AND HER UNKNOWN HEIRS; AND PREMIER CAPITAL LLC, Respondents.

C. A. No. WM-2022-0091

Superior Court of Rhode Island, Washington

November 18, 2022

For Petitioner: Douglas H. Smith, Esq.

For Respondents: Lynda L. Laing, Esq.; Fernando S. Cunha, Esq.; Adam J. Rose, Esq.

DECISION

TAFT-CARTER, J.

Before this Court for decision is Petitioner, Jutonus, LLC's (Jutonus) Petition for foreclosure of redemption in the property located at 22 Breach Drive Westerly, Rhode Island 02891 (Property). Premier Capital LLC, a lienholder, (Premier Capital) objects to the Petition. A hearing was held on October 21, 2022. Jurisdiction is pursuant to G.L. 1956 § 44-9-24.

I

Facts and Travel

The facts giving rise to this action are largely uncontested. Paul Fiano received title to the Property through Warranty Deed recorded on April 12, 2006. (Tax Examiner's Report (Report) 2.) A Writ of Attachment was issued and subsequently recorded on February 17, 2015 in the Westerly Town Clerks Office at Book 2015, Page 1748. Id. at 3.

On September 29, 2016, Paul Fiano filed for Chapter 13 Bankruptcy in the United States Bankruptcy Court for the District of Connecticut, Case No. 16-21558. (Pet'r's Ex. B.) An automatic stay was issued pursuant to 11 U.S.C. § 362(a).

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Due to the nonpayment of real estate taxes, a tax sale occurred on June 27, 2017.^[1] (Pet'r's Ex. A.) As the highest bidder, Jutonus purchased the Property. Id. Jutonus later received title through Collector's Deed dated July 6, 2017. (Pet'r's Ex. A.) Jutonus duly recorded the deed in the Record of Deed's Office of the Town of Westerly in Deed Book 2017 at 12171. Id.

On March 10, 2022, Jutonus petitioned this Court to foreclose all rights of redemption. (Petition to Foreclose (Petition).) In accordance with § 44-9-24, Raymond J. Tomasso, Esq. was appointed to serve as Title Examiner. (Report.) Attorney Tomasso submitted his findings on March 16, 2022 which laid out "all persons interested, directly, indirectly, or contingently" in the Property. Id.

This Court issued a Citation to the interested parties on April 26, 2022. See Citation. On May 20, 2022, Premier Capital timely answered the Petition, objecting to the foreclosure due to the tax sale occurring during the bankruptcy stay. (Resp't's Answer.) Thereafter, Jutonus submitted a response to Premier Capital's objection on September 2, 2022. (Pet'r's Response.) Premier Capital replied to the response on September 6, 2022. (Resp't's Reply.) Finally, on October 14, 2022, Jutonus submitted a surreply in response. (Pet'r's Surreply.) A hearing was held on October 21, 2022. See Docket.

II

Standard of Review

The Rhode Island Rules of Civil Procedure do not apply to "petitions for foreclosure of redemption of interests in land sold for nonpayment of taxes." Murray v. Schillace, 658 A.2d 512, 514 (R.I. 1995); Gaudreau v. Blasbalg, 618 A.2d 1272, 1274 (R.I. 1993). Instead, the procedures

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codified in the Rhode Island Tax Sale Statute apply and practice relating to tax sales follows the course of equity. Section 44-9-33; Albertson v. Leca, 447 A.2d 383, 389 (R.I. 1982). When confronted with issues arising from foreclosure proceedings, the Court is cognizant that, "because of a property owner's disproportionate loss, '[l]egislatures and courts have acted to ameliorate the severity of tax forfeitures.'" Medeiros v. Bankers Trust Co., 38 A.3d 1112, 1117 (R.I. 2012) (quoting ABAR Associates v. Luna, 870 A.2d 990, 994 (R.I. 2005).).

III

Analysis

A

Standing

Jutonus initially contends that Premier Capital, as creditor, lacks standing to enforce the automatic stay because the only legal beneficiaries are the debtor and the trustee. (Pet'r's Surreply 3.) In response, Premier Capital argues that it does have standing to enforce the automatic stay because the violation directly affects its interest in the Property. (Resp't's Reply 1.) Premier Capital further maintains that standing is irrelevant "because a tax foreclosure proceeding resulting in a transfer of the property that violates the automatic stay is void ab inito." Id.

Standing is defined as "[a] party's right to make a legal claim or seek judicial enforcement of a duty or right." Black's Law Dictionary 1695 (11th ed. 2019). Therefore, "[a] standing inquiry focuses on the party who is advancing the claim," not the party defending against that claim. Bucci v. Lehman Brothers Bank, FSB, 68 A.3d 1069, 1079 n.7 (R.I. 2013) citing Bowen v. Mollis, 945 A.2d 314, 317 (R.I. 2008)).

Moreover, the plaintiff must have suffered an injury in fact-"an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) actual or imminent, not

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'conjectural' or 'hypothetical.'" Pontbriand v. Sundlun, 699 A.2d 856, 862 (R.I. 1997) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). In addition, "there must be a causal connection between the injury and the conduct complained of-the injury has to be 'fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.'" Id. Lastly, "it must be 'likely,' as opposed to merely 'speculative,' that the injury will be 'redressed by a favorable decision.'" Id. at 561.

In the context of petitions for foreclosure on the right of redemption, federal courts are divided on the question of whether creditors have standing to assert violations of stays. The Second and Fifth Circuit Court of Appeals have held that creditors have standing to enforce bankruptcy stays. See generally 48th Street Steakhouse, Inc. v. Rockefeller Group, Inc. (In re 48th Street...