Mem'l Real Estate Grp. v. 111 Brewster Condo. Ass'n

• Docket Number: C. A. PM-2023-01172
• Decision Date: 17 January 2024
• Parties: MEMORIAL REAL ESTATE GROUP, LLC, Plaintiff, v. 111 BREWSTER CONDOMINIUM ASSOCIATION, ARDEN ENGINEERING CONSTRUCTORS, LLC, BENTLEY BUILDERS, LLC, JCT DEVELOPMENT, INC., MEMORIAL DEVELOPMENT, LLC, MEMORIAL HOSPITAL and RHODE ISLAND ATTORNEY GENERAL PETER F. NERONHA, in his official capacity as Administrator of Charitable Trusts of the State of Rhode Island, Defendants.
• Court: Rhode Island Superior Court

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MEMORIAL REAL ESTATE GROUP, LLC, Plaintiff,
v.
111 BREWSTER CONDOMINIUM ASSOCIATION, ARDEN ENGINEERING CONSTRUCTORS, LLC, BENTLEY BUILDERS, LLC, JCT DEVELOPMENT, INC., MEMORIAL DEVELOPMENT, LLC, MEMORIAL HOSPITAL and RHODE ISLAND ATTORNEY GENERAL PETER F. NERONHA, in his official capacity as Administrator of Charitable Trusts of the State of Rhode Island, Defendants.

C. A. No. PM-2023-01172

Superior Court of Rhode Island, Providence

January 17, 2024

For Plaintiff: Michael A. Kelly, Esq.

For Defendant: Joseph J. Reale, Jr.; Robert J. Ameen, Esq.; Mitchell Edwards, Esq.

For Interested Richard L. Gemma, Esq.; Sarah Rice, Esq.;

Parties: Marissa D. Pizana, Esq.

DECISION

STERN, J.

Before the Court is Plaintiff, Cross-claim Defendant and Counterclaim Defendant, Memorial Real Estate Group's (Plaintiff^[1]) Motion to Dismiss Defendants, Cross-claim Plaintiff, Rhode Island Attorney General Peter F. Neronha, in his official capacity as Administrator of Charitable Trusts of the State of Rhode Island (the Attorney General), and Counterclaim Plaintiffs, 111 Brewster Condominium Association, Arden Engineering Constructors, LLC, Bentley Builders, LLC, JCT Development, Inc., Memorial Development, LLC (Memorial Development),

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and Memorial Hospital's (Memorial Hospital) (collectively, Defendants) declaratory judgment claims. Jurisdiction is pursuant to Rule 12(b)(6) of the Superior Court Rules of Civil Procedure.

I

Facts and Travel^[2]

The underlying action involves a judicial foreclosure for the property located at 111 Brewster Street, Pawtucket, RI 02860 (the Property), the campus of the former Memorial Hospital. (Memorial Hospital's Countercl. ¶¶ 1, 4.) Memorial Development acquired the Property via quitclaim deed (the Deed) from Memorial Hospital on January 5, 2021. (Pl.'s Am. Compl. ¶ 13; Memorial Hospital's Answer ¶ 13 and Attorney General's Answer ¶ 13 (admitting that the Deed speaks for itself)). Over a year later, on March 22, 2022, Memorial Development executed a promissory note (the Note) with a corresponding mortgage (the Mortgage) for $3,500,000 on the Property with Nextbank International, Inc. (Nextbank). (Pl.'s Am. Compl. ¶¶ 14-15; Memorial Hospital's Answer ¶¶ 14-15; and Attorney General's Answer ¶¶ 14-15 (admitting that the Note speaks for itself)).

On December 28, 2022, Nextbank assigned its interest in the mortgage to Plaintiff. (Pl.'s Am. Compl. ¶ 16; Memorial Hospital's Answer ¶ 16 and Attorney General's Answer ¶ 16 (admitting that the Assignment speaks for itself)). Memorial Development purportedly defaulted on the Mortgage by failing to make a payment due on December 1, 2022. (Pl.'s Am. Compl. ¶ 17.) The default has allegedly never been cured. Id. ¶ 18.

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Plaintiff instituted this action on March 8, 2023 and alleged that it is foreclosing pursuant to a statutory power of sale and that all conditions under the acceleration of the Note and foreclosure of the Mortgage have occurred or been fulfilled. See generally Compl. The Property supposedly has interests subordinate to the Mortgage at issue, including another mortgage and several liens. Id. ¶ 21.

Plaintiff's Complaint^[3] seeks a decree permitting foreclosure of the Property and preventing any right of redemption. Id. ¶¶ 25-26. By contrast, Defendants wish to bar any foreclosure because they claim that the Deed required each Defendants' consent prior to a sale, transfer, or conveyance of the Property. (Memorial Hospital's Countercl. ¶¶ 16-17; Attorney General's Cross-cl. ¶¶ 9-12.) This provision in the Deed originates from the Court's Order in In Re The Memorial Hospital, PC-2020-06291, an action brought by Care New England "to modify deed restrictions on real property held by Memorial Hospital." (Memorial Hospital's Countercl. ¶ 4.) In the Order, the Court- through the application of the cy pres doctrine-permitted Lockwood Development Partners, or its nominee,^[4] to acquire land subject to certain limitations on transferring the Property. Id. ¶ 5. One of the limitations in the Order included a requirement that Defendants must consent to any sale, conveyance, or transfer of the Property. Id. ¶ 6.

Seeking to enforce this limitation in the Deed, Defendants each filed a counter and cross-claim against Plaintiff. See generally Memorial Hospital's Countercl.; Attorney General's Cross-cl. Both the counter and cross-claims each contain a one-count declaratory judgment action seeking the voidance of any purported transfer of the Property between Memorial Development

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and Nextbank because valid consent was not obtained by Memorial Development prior to executing the mortgage. See id.

On November 9, 2023, Plaintiff submitted its Motion to Dismiss Memorial Hospital's counterclaim and the Attorney General's cross-claim, arguing that the Mortgage was not a conveyance or transfer and that, even if it was, severability provisions contained within the Mortgage barred it from operating as such. See Pl.'s Mem. in Supp. of its Mot. to Dismiss (Pl.'s Mem.) Defendants separately filed their Objections and corresponding memorandums in support on December 11, 2023. (Docket.)

II

Standard of Review

A motion to dismiss under Rule 12(b)(6) of the Superior Court Rules of Civil Procedure "has a narrow and specific purpose: 'to test the sufficiency of the complaint.'" Mokwenyei v. Rhode Island Hospital, 198 A.3d 17, 21 (R.I. 2018) (quoting Multi-State Restoration, Inc. v. DWS Properties, LLC, 61 A.3d 414, 416 (R.I. 2013)). A trial justice "'must look no further than the complaint, assume that all allegations in the complaint are true, and resolve any doubts in a plaintiff's favor.'" Multi-State Restoration, Inc., 61 A.3d at 416 (quoting Laurence v. Sollitto, 788 A.2d 455, 456 (R.I. 2002)) (internal citations omitted). The Court will grant a motion to dismiss "if it 'appears beyond a reasonable doubt that a plaintiff would not be entitled to relief under any conceivable set of facts.'" Laurence, 788 A.2d at 456 (quoting Rhode Island Affiliate, ACLU, Inc. v. Bernasconi, 557 A.2d 1232, 1232 (R.I. 1989)). Importantly, "'the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.'" Chhun v. Mortgage Electronic Registration Systems, Inc.,

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84 A.3d 419, 422 (R.I. 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).^[5]

III

Analysis

A

The Mortgage is a Conveyance

Plaintiff contends that the Mortgage does not fall within the "sale, transfer or conveyance" restrictions placed on Memorial Development by the Court's Order and the Deed. (Pl.'s Mem. 4.) Plaintiff avers that the Mortgage was a device used to develop a vacant hospital into housing and healthcare for U.S. military veterans. Id. at 5. Plaintiff cautions that the Court...