Lamarque v. Fairbanks Capital Corp.

• Decision Date: 31 July 2007
• Docket Number: No. 2005-231-Appeal.,2005-231-Appeal.
• Citation: 927 A.2d 753
• Parties: Andre C. LAMARQUE et al. v. FAIRBANKS CAPITAL CORP. et al.
• Court: Rhode Island Supreme Court

927 A.2d 753

Andre C. LAMARQUE et al. v. FAIRBANKS CAPITAL CORP. et al.

No. 2005-231-Appeal.

Supreme Court of Rhode Island.

July 31, 2007.

Thomas J. Cronin, Esq., Providence, for Plaintiff Kathy M. Lamarque.

David N. Rosin, Esq, for Defendant Fairbanks Capital Corp.

Justin T. Shay, Esq., for Defendant Anthony P. Ciccarone.

Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, SUTTELL, and ROBINSON, JJ.

OPINION

Justice FLAHERTY, for the Court.

What should be the breadth of a collateral attack on the final judgment in a class action suit entered by a federal court or the court of a sister state? The plaintiff, Kathy M. Lamarque, appeals from a decision of the Superior Court granting summary judgment in favor of the defendants, Fairbanks Capital Corporation (Fairbanks) and Anthony P. Ciccarone (Ciccarone). To support its motion for summary judgment in the Superior Court, Fairbanks argued that the plaintiff's suit was barred by the doctrines of res judicata and release. Fairbanks contended that the plaintiff was an absent member of the class in a class action entitled Curry v. Fairbanks Capital Corp., No. 03-10895-DPW (D.Mass.2003), and that the settlement and final judgment in that litigation barred the prosecution of her case in the state court. The Superior Court agreed with Fairbanks and granted summary judgment in its favor. We affirm.

I Facts and Travel

Kathy M. Lamarque and Andre C. Lamarque,¹ formerly husband and wife, jointly owned property at 96 Narragansett Avenue in West Warwick, Rhode Island (the property).² In an effort to assist their son in paying for his college education, Andre and Kathy sought to refinance the property. However, it was agreed between them that Andre would be solely responsible for any loan obligations. In June 1995, Andre and Kathy executed a note to Conti Mortgage Corporation, secured by a mortgage on the real estate.³ The defendant, Fairbanks, serviced the loan.

Sometime in 2001, a dispute arose about whether certain obligations under the loan agreement were in default. After some unsuccessful negotiations between Kathy and Fairbanks, Fairbanks began foreclosure proceedings on the property. A foreclosure sale was conducted on December 18, 2001, and the property was purchased by defendant Ciccarone.

On January 18, 2002, Kathy and Andre filed suit in the Superior Court for Kent County against Fairbanks and Ciccarone⁴ alleging that Fairbanks had illegally foreclosed on the property, had breached an implied contract not to foreclose, and that Fairbanks' actions constituted deceptive trade practices. The complaint requested that the court declare the foreclosure void and award damages for Fairbanks' breach of contract and deceptive trade practices. Fairbanks answered the complaint and the case proceeded to discovery. Ciccarone was included as a defendant merely on the basis of his ownership of the property.⁵

Meanwhile, in early 2003,⁶ a consolidated class action, Curry v. Fairbanks Capital Corp., was filed in the United States District Court for the District of Massachusetts (District Court or USDC). Apparently, that case was amicably resolved, and on November 14, 2003, a settlement agreement (settlement agreement) was presented to the court. On May 13, 2004, after a fairness hearing was conducted,⁷ a final order was entered certifying the settlement class and approving the settlement (final order).⁸ Finally, on May 19, 2004, final judgment was entered in the class action suit (which incorporated the final order) and the underlying claims of any and all class members were dismissed with prejudice on the merits (final judgment).

The Lamarques' Superior Court suit still was pending at that time, and in September 2004, Fairbanks moved for summary judgment on the grounds that the plaintiffs'⁹ action was barred by res judicata and release because, as absent class members who had not opted out of the class action, they were bound by the judgment in Curry. Kathy¹⁰ objected to the motion and argued (1) that her claims were not encompassed by the claims covered in the Curry suit, and, therefore, she was not a member who is bound by the judgment in that action; (2) that she was not provided proper notice of either the Curry suit or its settlement and, thus, cannot be bound by its judgment; and (3) that, even if she was covered by the class action, her type of claim against Fairbanks was expressly excepted by the District Court from those claims released by the class action settlement.

The hearing justice in the Superior Court ruled against Kathy on all fronts; she found that plaintiff's claims indeed were covered by the class action suit, that they did not fall under the exception contained in the settlement and incorporated into the final judgment, that she was given adequate notice of the Curry class action, and that she therefore was bound by the judgment in that suit under the principles of res judicata. Accordingly, the hearing justice granted summary judgment for defendant. Final judgment was entered pursuant to rule 54(b) of the Superior Court Rules of Civil Procedure, and plaintiff timely appealed.¹¹

II Standard of Review

"In passing on a grant of summary judgment by a justice of the Superior Court, this [C]ourt conducts a de novo review." United Lending Corp. v. City of Providence, 827 A.2d 626, 631 (R.I.2003). Usually, this standard requires this Court to scrutinize the record to ascertain whether there are "genuine issues of material fact." See Carlson v. Town of Smithfield, 723 A.2d 1129, 1131 (R.I.1999). This case, however, presents a pure question of law; there is no dispute about what the relevant facts are, but only about the legal consequences that those facts may carry.

III Analysis

"It is beyond cavil that a suit can be barred by the earlier settlement of another suit in either of two ways: res judicata or release." Nottingham Partners v. Trans-Lux Corp., 925 F.2d 29, 31-32 (1st Cir.1991). The plaintiff argues, however, that her suit is not barred by either res judicata or release because (1) her claims were not covered by the class action suit; (2) she was not afforded due process in the Curry class action because she was not given proper notice of that suit; and, even if she is a member of the Curry action, (3) her personal claims against defendant fall into the "Reserved Claims and Defenses" exception laid out in the settlement agreement of the Curry suit. Although we are sympathetic to plaintiff's dilemma, we nevertheless must disagree with her arguments. Because plaintiff's first and third arguments are less complex, we address them first.

A

Whether plaintiff's claims are covered by the Curry class action

The plaintiff's Superior Court complaint alleged that defendant violated certain Rhode Island statutory notice requirements and breached an implied contract when it foreclosed on the property. Further, she claimed that the actions of defendant constituted deceptive trade practices.¹²

Paragraph 3 of the District Court's final order defines the certified class as:

"All persons, other than Excluded Persons, whose loans were serviced by Fairbanks during the period from January 1, 1999 to December 10, 2003, inclusive, and:

"(a) whose loans were (i) in Default or treated as being in Default by Fairbanks and (A) who incurred or were assessed late fees and/or Default-Related fees including without limitation, fees denominated by Fairbanks as `corporate advances,' or (B) who were affected by Default-Related conduct; and/or (ii) ones in which the Member incurred or was assessed prepayment penalties in Massachusetts, Alabama or West Virginia or in violation of law or contract; or

"(b) who otherwise were affected, or whose loans were otherwise affected, by one of the Covered Practices."

Further, the settlement agreement defines "Default-Related" as:

"[A]ny and all acts, omissions, practices, conduct or behavior by Fairbanks or one of the Fairbanks-Related Parties that was taken at any time with respect to a Serviced Loan that is or ever was in Default or treated by Fairbanks as being in Default, and, subject to the foregoing, shall include, but not be limited to, those Servicing practices that are the subject of the Consolidated Class Action Complaint, and all related transactions or occurrences or series of transactions or occurrences."

In view of these precisely worded definitions, it is our opinion that plaintiff's claims fall squarely within the class as defined and certified by the USDC. The plaintiff most certainly is a person whose loan was serviced by Fairbanks during the period from January 1, 1999, to December 10, 2003, and who either was in default, or was treated by Fairbanks as being in default, and was affected by the "Default-Related" conduct of Fairbanks as that term was defined by the District Court.

The plaintiff argues, however, that she was not a member of the class because (1) she was technically not a borrower on the loan; (2) she was not listed on the class member list ordered by the District Court;¹³ and (3) the release contained in the settlement agreement did not apply to individual property claims such as her Superior Court action, but rather, applied only to other class actions that either were pending at the time of the settlement, or were attempted to be brought in the future. These arguments warrant little discussion.

First, the loan documents, signed by Kathy and Andre at the time of execution, list both parties together as "borrower," and thus the documents themselves undercut plaintiff's initial contention. Second, the issue of whether plaintiff falls within the class in Curry is governed solely by the definition of the class as certified in the final order.¹⁴ That portion of the settlement agreement calling for the creation of a class member list deals solely with the issue of notice and clearly is not intended to be a definitive or all-inclusive list of possible class members. Thus, in our view, plaintiff's exclusion...