Leone v. Mortg. Elec. Registration Sys.
| Decision Date | 20 October 2014 |
| Docket Number | No. 2013–59–Appeal.,2013–59–Appeal. |
| Citation | 101 A.3d 869 |
| Parties | Desmond A. LEONE v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS et al. |
| Court | Rhode Island Supreme Court |
Mindy C. Montecalvo, Esq., Pawtucket, for Plaintiff.
William M. Walsh, Esq., Warwick, for Defendant.
Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.
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 argument 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 has 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.
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 One was the lender on the promissory note that Leone signed as maker. The note stated in relevant part, The note was secured by a mortgage on the Auburn Avenue property. The mortgage deed denominated Leone as the borrower and mortgagor and specified that MERS was the mortgagee, acting as nominee for lender, Equity One, and lender's successors and assigns. The mortgage deed included the statutory power of sale in favor of MERS as well as “to the successors and assigns of MERS.” Finally, it was provided that MERS had the right to enforce its interests, “including, but not limited to, the right to foreclose and sell the property,” in the event Leone failed to fulfill his obligation to pay the note. The mortgage deed was duly executed and recorded in the Land Evidence Records for the Town of Johnston on December 11, 2006.
On April 24, 2009, Equity One executed a notarized limited power of attorney enabling ARC to act on its behalf. ARC's power of attorney 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 the 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 plaintiff's complaint, filed a motion to dismiss the complaint under Rule 12(b)(6) of the Superior Court Rules of Civil Procedure. Attached to the memorandum in support of the motion to dismiss were two documents that had not been incorporated in plaintiff's initial pleading: the note and the limited power of attorney. Leone filed an objection to the motion to dismiss, attaching to his memorandum a document that was not part of his complaint. This document, entitled “Consent Order,” was issued by the United States Department of the Treasury; it concerned MERS's business practices. After several continuances, the motion to dismiss was argued on May 24, 2011.4
On April 12, 2012, the hearing justice issued a written decision after having considered materials outside of the pleadings.
As a result, the motion to dismiss was converted to a motion for summary judgment. In his decision, the hearing justice found that plaintiff had failed to demonstrate the existence of a genuine dispute of material fact. The justice further found that, at the time of foreclosure, ARC was a valid assignee of the mortgage from MERS and that as a result, ARC had the statutory power of sale. Additionally, the justice found that ARC held the power of attorney for the holder of the note. The justice also found that Leone was in default of his obligations under the note because he had failed to make payments which had precipitated the foreclosure proceedings. Therefore, the hearing justice granted summary judgment in favor of defendants. The plaintiff filed a timely appeal to this Court.
When ruling on a motion to dismiss, Rule 12(b) states if “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 * * *.” Further, this Court has held that “when the [hearing] justice receives evidentiary matters outside the complaint and does not expressly exclude them in passing on the motion, then Rule 12(b)(6) specifically requires the motion to be considered as one for summary judgment.” Multi–State Restoration, Inc. v. DWS Properties, LLC, 61 A.3d 414, 417 (R.I.2013) (quoting Martin v. Howard, 784 A.2d 291, 298 (R.I.2001) ).
When a Rule 12(b)(6) motion is converted to a motion for summary judgment, this Court reviews a plaintiff's appeal de novo. Multi–State Restoration, Inc., 61 A.3d at 417 (citing DeSantis v. Prelle, 891 A.2d 873, 876–77 (R.I.2006) ). We employ the same standard as that of the hearing justice: “[i]f we conclude, after viewing the evidence in the light most favorable to the nonmoving party, 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 grant of summary judgment.” Pereira v. Fitzgerald, 21 A.3d 369, 372 (R.I.2011) (quoting Lacey v. Reitsma, 899 A.2d 455, 457 (R.I.2006) ). “Moreover, the nonmoving party bears the burden of proving by competent evidence the existence of a disputed issue of material fact and cannot rest upon mere allegations or denials in the pleadings, mere conclusions or mere legal opinions.” Daniels v. Fluette, 64 A.3d 302, 304 (R.I.2013) (quoting Great American E & S Insurance Co. v. End Zone Pub & Grill of Narragansett, Inc., 45 A.3d 571, 574 (R.I.2012) ).
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. We conclude that these arguments are without merit and we will address them in turn.
The plaintiff first argues that the conversion of defendants' Rule 12(b)(6)motion to dismiss into a motion for summary judgment under Rule 56 of the Superior Court Rules of Civil Procedure was improper. Specifically, the plaintiff argues that he was not afforded proper notice of the conversion in accordance with Rule 12(b). Based on our review of the record, we disagree.
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 included 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....
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