Lister v. Bank of Am., N.A.

• Decision Date: 12 June 2015
• Docket Number: No. 14–1448.,14–1448.
• Parties: Deborah A. LISTER; Leon Alan Blais, Plaintiffs, Appellants, v. BANK OF AMERICA, N.A., in its own right and as successor by merger to BAC Loan Servicing, Inc.; Mortgage Electronic Registration Systems, Inc.; Homeward Residential, Inc., in its own rights and as successor to American Home Mortgage Servicing, Inc.; OCWEN Loan Servicing, LLC, Defendants, Appellees, Neil F. Luria, in his capacity as Liquidating Trustee of Chapter 11 Estate of Mortgage Lenders Network, USA, Inc., Defendant.
• Court: U.S. Court of Appeals — First Circuit

790 F.3d 20

Deborah A. LISTER; Leon Alan Blais, Plaintiffs, Appellants

v.BANK OF AMERICA, N.A., in its own right and as successor by merger to BAC Loan Servicing, Inc.; Mortgage Electronic Registration Systems, Inc.; Homeward Residential, Inc., in its own rights and as successor to American Home Mortgage Servicing, Inc.; OCWEN Loan Servicing, LLC, Defendants, Appellees

Neil F. Luria, in his capacity as Liquidating Trustee of Chapter 11 Estate of Mortgage Lenders Network, USA, Inc., Defendant.

No. 14–1448.

United States Court of Appeals, First Circuit.

June 12, 2015.

Leon A. Blais, with whom Blais & Parent was on brief, for appellants.

Maura K. McKelvey, with whom Marissa I. Delinks and Hinshaw & Culbertson LLP were on brief, for appellees Mortgage Electronic Registration Systems, Inc.; Homeward Residential Inc., in its own right and as successor to American Home Mortgage Servicing, Inc.; and, OCWEN Loan Servicing, LLC.

Joseph F. Yenouskas, with whom George R. Schneider and Goodwin Procter LLP were on brief, for appellee Bank of America, N.A.

Before HOWARD, SELYA, and STAHL, Circuit Judges.

Opinion

HOWARD, Circuit Judge.

Claiming uncertainty as to which entity holds an enforceable mortgage on their home, Deborah Lister and Leon Blais filed suit against numerous potential mortgagees. ¹

The district court subsequently granted defendants' motions to dismiss for failure to state a claim. See Lister v. Bank of America, N.A., 8 F.Supp.3d 74 (D.R.I.2014). Lister and Blais timely appealed, asserting several claims of error. We affirm the dismissal, although for different reasons than those offered by the district court.

I.

As we are reviewing the grant of a motion to dismiss, we recite the facts as alleged in the complaint and documents incorporated therein by reference.² Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir.2012). In October 2000, Lister purchased a parcel of property in Lincoln, Rhode Island, and recorded her interest in the Town of Lincoln's Land Evidence Records. In 2006, Lister refinanced and secured a new mortgage with Mortgage Lenders Network (“MLN”). Lister alleges that neither the note nor the mortgage were executed, witnessed, or notarized, and that she does not have any recollection of signing the mortgage. Nevertheless, she began making payments to the address listed on a document entitled “First Payment Notice.” After MLN filed for bankruptcy in Delaware, Lister received notice to forward her mortgage payments to Bank of America, and she did so.

In 2008, Lister “grew suspicious” about the handling of the note and mortgage so she “slowed” her payments. In November 2008, Countrywide Home Loans contacted Lister and threatened to foreclose. Shortly thereafter, Harmon Law Offices contacted Lister and informed her that it represented Countrywide and reiterated the foreclosure threat. On November 5, 2008, Blais demanded verification from Harmon under the Fair Debt Collection Practices Act and requested an accounting of funds previously paid. Almost two years later, on September 10, 2010, under continued threats of foreclosure, Blais again requested verification and an accounting. Each request was ignored and Harmon pressed forward with foreclosure proceedings until Mr. Blais threatened to initiate a lawsuit against Harmon and its attorneys. On November 4, 2010, Harmon “put on hold” the scheduled foreclosure sale. The parties agree that there is no foreclosure currently pending.

Eventually, defendant Homeward began to communicate with Lister, but ignored Blais's requests for verification. Lister's most recent communication regarding the mortgage (at least before this suit was initiated) came from defendant OCWEN, which inserted itself as the loss payee on Lister's homeowner insurance policy.

In an attempt to determine the note holder, Lister wrote to the liquidating trustee of MLN, who explained that after filing for bankruptcy, all of MLN's documents had been destroyed. Plaintiffs allege that since MLN's documents were destroyed, and subsequent “holders” are not able to produce the documents, then it is unlikely that the documents exist.

Plaintiffs filed suit, alleging three causes of action. Count I seeks “Interim Relief,” in which they agree to sell the house and place the proceeds in the court registry or in escrow, from which the debt to the holder of the note will later be satisfied. In Count II, they seek “Quieting of Title” in order to nullify the note and mortgage. In Count III, they request a “Credit Reporting,” where the court would declare that plaintiffs owe nothing to defendants and that defendants would remove all delinquent reports from their credit.

In ruling on defendants' motions to dismiss, the district court directly considered only Count II (quiet title), determining that it would be dispositive of the other counts. After first rejecting Lister's claim that the mortgage and note were void for never having been executed (executed copies were attached to defendants' motions), the court went on to reach several other legal conclusions: first, that plaintiffs' assertion that the note was unenforceable because it cannot be produced is contrary to Rhode Island law; second, that the facts alleged in the complaint were insufficient to give plaintiffs' standing to challenge the assignment of the mortgage; and finally, that the mortgage was enforceable.

This timely appeal followed.³

II.

“Dismissal for failure to state a claim is appropriate if the complaint does not set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.” Lemelson v. U.S. Bank Nat'l Ass'n, 721 F.3d 18, 21 (1st Cir.2013) (internal quotation marks omitted). We review the district court's Rule 12(b)(6) dismissal de novo, construing all factual allegations in the complaint in the light most favorable to the non-moving party to determine if there exists a plausible claim upon which relief can be granted. Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1, 7 (1st Cir.2014). In so doing, however, we disregard facts which have been “conclusively contradicted by [plaintiffs'] concessions or otherwise.” Id. (quoting Soto–Negrón v. Taber Partners I, 339 F.3d 35, 38 (1st Cir.2003) ). As especially relevant here, we will consider documents incorporated by reference into the complaint and matters of public record. Id. (citing Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir.2008) ). Finally, the district court's rationale is not binding on appeal, and its ruling may be affirmed on any basis apparent from the record. Freeman v. Town of Hudson, 714 F.3d 29, 35 (1st Cir.2013). Against this backdrop, we turn to the appellate matters at hand.

III.

We start our analysis by quickly disposing of an array of issues that appellants raise—or fail to raise—in their briefs. First, appellants argue that discovery is needed to allow them to uncover facts to support their claims. In so doing, however, they ignore the fundamental premise of Rule 12(b)(6), i.e., that the plaintiff must set forth sufficient factual matter to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). As will be discussed below, Lister fails to do so and discovery would not alter that conclusion.

Next, appellants suggest that rather than employing the Rule 12(b)(6) legal framework described above, the district court should have instead judged the complaint on what they call “the extraordinarily low standard of [Rhode Island's] title quieting statute.” We should thus not impose a “requirement to cite to dispositive facts in the complaint.” Appellants' position flies in the face of clear precedent, which holds that “state pleading requirements, so far as they are concerned with the degree of detail to be alleged, are irrelevant in federal court even as to claims arising under state law.” Andresen v. Diorio, 349 F.3d 8, 17 (1st Cir.2003) (citing Hanna v. Plumer, 380 U.S. 460, 466–74, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) ); see also Chhun v. Mortg. Elec. Registration Sys., Inc., 84 A.3d 419, 422 (R.I.2014) (acknowledging that the federal standard for surviving motions to dismiss is more stringent than the traditional Rhode Island standard).

As a final housekeeping matter, we note that while the district court dismissed the complaint in its entirety, appellants offer no argument with respect to Counts One (“Preliminary Relief”) and Three (“Credit Reporting”). We therefore deem those claims waived. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.1990) (“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived.”).

IV.

This leaves only Count Two, “Quieting of Title,” before us on appeal. Pursuant to Rhode Island law:

Any person or persons claiming title to real estate, or any interest or estate, legal or equitable, in real estate ... may bring a civil action against all persons claiming, or who may claim, and against all persons appearing to have of record any adverse interest therein, to determine the validity of his, her, or their title or estate therein, to remove any cloud thereon, and to affirm and quiet his, her, or their title to the real estate. The action may be brought under the provisions of this section whether the plaintiff may be in or out of possession and whether or not the action might be brought under the provisions of § 34–16–1 or under the provisions of any other statute.

R.I. Gen. Laws § 34–16–4 (1956).⁴

By its own terms, the Rhode Island statute requires defendants in a quiet title action to have “an adverse interest” to that of the plaintiff. See also R.I. Gen. Laws § 34–16–5 (requiring quiet title complaint to contain, inter alia, “[a] recital of the character and source of the claims adverse”). In this specific case, the facts alleged in the...