Payette v. Mortgage Electronic Registration Systems
| Decision Date | 22 August 2011 |
| Docket Number | C.A. PC-2009-5875 |
| Parties | CHRISTOPHER A. PAYETTE, DALE J. PAYETTE v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS; INDYMAC BANK FSB; ONEWEST BANK FSB |
| Court | Rhode Island Superior Court |
DECISION
Before this Court is Defendants' Mortgage Electronic Registration Systems (MERS), IndyMac Bank, FSB (IndyMac), and OneWest Bank FSB's (OneWest), (collectively, Defendants) Motion for Judgment on the Pleadings pursuant to Rule 12(c) of the Rhode Island Superior Court Rules of Civil Procedure. Plaintiffs Christopher A. Payette and Dale J. Payette (Plaintiffs) filed a declaratory judgment action that petitions the Court to quiet title to certain real property located at 5 School Street, Warwick, Rhode Island (the property). This action arises out of Plaintiffs' challenge to Defendant OneWest's foreclosure sale of the property on October 16, 2009, and the title the foreclosure buyer acquired through the foreclosure sale.
On June 6, 2006, Plaintiffs executed a promissory note in favor of IndyMac in the amount of $250, 000. (Answer Ex. C (hereinafter, "Note").) Plaintiffs also executed a mortgage on the property to secure payment of the Note naming IndyMac as the lender and MERS as the mortgagee and as nominee of IndyMac and IndyMac's successors and assigns. (Compl. Ex. 1; Answer Ex. B (hereinafter "Mortgage").) On June 12, 2006, the Mortgage was recorded in the Land Evidence records for the City of Warwick, Book 6209 at Page 57. IndyMac thereafter endorsed the Note in blank to Deutsche Bank.1[]IndyMac continued to service the Note on behalf of Deutsche Bank.
On July 11, 2008, the Office of Thrift Supervision closed IndyMac and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for IndyMac. (Answer Ex. D.) FDIC reorganized IndyMac into a new entity it named IndyMac Federal, and transferred all of IndyMac's assets to IndyMac Federal (Answer Ex. E.) Then, FDIC, still acting as receiver for IndyMac Federal, transferred the rights associated with the Note to OneWest. Contemporaneously, MERS assigned its mortgagee interest to OneWest. (Answer Ex. F.)
Plaintiffs do not dispute that they defaulted on the Note. OneWest, as note holder and as assignee of MERS' status as mortgagee and nominee to the original lender, IndyMac and IndyMac's successors and assigns, initiated the foreclosure process in August of 2009. Plaintiffs filed the instant action on October 7, 2009, the day before the scheduled foreclosure sale. The parties agreed to reschedule the foreclosure sale to October 16, 2009. Meanwhile, this Court denied Plaintiffs' request for a preliminary injunction. The foreclosure sale took place as scheduled on October 16, 2009.
Defendants filed the instant Motion for Judgment on the Pleadings on January 11, 2011. Plaintiffs objected March 25, 2011. On the date of the scheduled hearing, March 31, 2011, this Court issued its decision in Porter v. First NCL Financial Services, No. PC-10-2526, 2011 WL 1251246 (R.I. Super.). The parties agreed to submit supplemental memoranda to discuss the impact of the Porter decision on the instant motion. This Court then took the matter under advisement.
STANDARD OF REVIEW
Before the Court is Defendants' Motion for Judgment on the Pleadings. Also before the Court, however, are documents that are attached as exhibits to the various filings that relate to the instant motion. "Strictly speaking, matters outside the pleadings are not relevant" to a motion for judgment on the pleadings. Kent et al, R.I. Civil & App. Proc., § 12:13 (2006) (hereinafter Kent). If "matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment." Super. R. Civ P. 12(c).
The submission of additional materials does not automatically result in conversion of a motion for judgment on the pleadings into a motion for summary judgment. "A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." Super. R. Civ. P. 10 (c). Further, exhibits may be incorporated by reference into a pleading; these referenced exhibits are also considered a part of the pleading. Kent § 10:3. When the exhibits associated with a motion for judgment on the pleadings were included with or incorporated into the pleadings, the proper standard of review remains that for judgment on the pleadings. See Super. R. Civ. P. 10 (c); Kent §§ 10:3, 12:13.
If however, either party submits new materials outside of its exhibits to the pleadings in support of its position on a motion for judgment on the pleadings, the court must decide whether to include these materials in its adjudication. If the court excludes these materials, it will apply the Rule 12(c) standard. If the court includes these materials "the motion shall be treated as one for summary judgment." Super R. Civ. P. 12(c). The distinction between Rule 56 and Rule 12(c) is "salient…because Rule 56 erects a hurdle for the nonmovant that is far more difficult to clear than the relatively modest hurdle posed by Rule 12(c)." Gulf Bank & Trust Co. v. Reder, 355 F.3d 35, 38 (1st Cir., 2004).2[]
Here, Defendants' Motion does not introduce new material—it includes only the Complaint with its exhibits3[] and the Answer with its exhibits.4[] Pursuant to Rule 10(c), the Court may consider only these documents under the Rule 12(c) standard. Plaintiffs, however, submitted numerous exhibits with their Objection and Supplemental Memorandum.5[] Defendants' Supplemental Memorandum also contains an additional item.6[] These items show the Mortgage travel from IndyMac (the loan originator) to MERS, FDIC, IndyMac Federal, and ultimately OneWest (the foreclosing bank). These items show the Note travel from IndyMac to FDIC, IndyMac Federal, and ultimately OneWest. Thus, the Court must decide whether to exclude these materials because they are outside the pleadings and adjudicate using the judgment on the pleadings standard of review, or include them and convert the Motion into a motion for summary judgment.
The decision to include or exclude proffered materials in connection with a Rule 12(c) motion is entrusted to the sound discretion of the court. Gulf Bank & Trust Co., 355 F.3d at 38. To convert a motion for judgment on the pleadings into one for summary judgment, the Court must be satisfied that the party opposing the motion had adequate notice of conversion and a "reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Super. R. Civ. P. 12(c).
Notice to the parties does not need to be an express warning from the Court. Collier v. City of Chicopee, 158 F.3d 601, 603 (1st Cir. 1998) (); see also Gulf Coast Bank & Trust, 335 F.3d at 38 (). The Court need only find that the parties have constructive notice of conversion potential. Collier, 158 F.2d at 603 (citing Rodriguez, 115 F.3d at 83).
The movant's submission of materials outside the pleadings puts the nonmovant "squarely on notice that the court ha[s] the option of treating the motion as one for summary judgment." Rodriguez, 115 F.3d at 83. Likewise, "[l]ogic dictates that the same result must obtain when the non-movant appends such materials to his opposition." Collier, 158 F.3d at 603; see also Rubert-Torres v. Hosp. San Pablo Inc., 205 F.3d 472, 476 (1st Cir. 2000). The Court may then convert the motion without providing explicit notice to the parties. Rubert-Torres, 205 F.3d at 475-76. In Rubert-Torres, the First Circuit Court of Appeals upheld the District Court's decision to convert without warning the parties of its intent to convert. Id. at 475. The Court of Appeals viewed the nonmovant's submission of a single piece of evidence with its objection to the movant's 12(c) motion as an invitation to convert the motion. Id. at 475-76. Further, the Court of Appeals reasoned that the ten-month period from the start of the case to the dispositive motion was ample time for the nonmovant to have gathered the evidence necessary to oppose a motion for summary judgment. Id. at 425.
Here, Defendants' original motion on the pleadings included only the pleadings. It was Plaintiffs that opened the door to conversion with their objection and supplemental memorandum, which are, combined, accompanied by no less than nine (9) new exhibits. Plaintiffs have received adequate notice of conversion because Plaintiffs themselves invited conversion. Rubert-Torres, 205 F.3d at 475-76. In fact, Plaintiffs inform the Court that their submission of certain exhibits "are in effect affidavits in Support of a Rule 56 Summary Judgment Motion." (Pls.' Mem. in Obj. to Defs.' Mot at 42.) Moreover, Plaintiffs accuse Defendants of mislabeling their Motion for Judgment on the Pleadings as a Motion for Summary Judgment. (Pls.' Mem. in Obj. to Defs.' Mot. at 43.) These statements assure the Court that Plaintiffs have had "ample notice of the impending conversion." Collier, 158 F.3d at 603. Defendants' Supplemental Memorandum contains a single new exhibit: A flow chart purporting to track the travel of the Note and Mortgage. Thus, Defendants show they are also on notice of conversion by their own actions and by acquiescence to Plaintiffs' submission of voluminous materials that are outside those attached to or incorporated by reference into the pleadings.
Since both parties demonstrated that they harbor no reservations about conversion, and in fact invite the action, the Court must decide whether to...
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