Woel v. Christiana Trust
| Decision Date | 02 June 2020 |
| Docket Number | No. 2018-347-Appeal.,PM 16-921,2018-347-Appeal. |
| Citation | 228 A.3d 339 |
| Parties | Cesar A. WOEL v. CHRISTIANA TRUST , AS TRUSTEE FOR STANWICH MORTGAGE LOAN TRUST SERIES 2017-17 , et al. |
| Court | Rhode Island Supreme Court |
Todd S. Dion, Esq., for Plaintiff.
John S. McNicholas, Esq., Defendants.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
The plaintiff, Cesar Woel, appeals from a Superior Court order dismissing his complaint against the defendants, Christiana Trust, as Trustee for Stanwich Mortgage Loan Trust Series 2017-17, and Selene Finance (collectively defendants), and declaring that a foreclosure sale of the plaintiff's property was valid. The plaintiff argues that the foreclosure sale is void because the notice of default sent to him by the defendants failed to comply with the terms of the mortgage. Because we agree with this contention, we vacate the order of the Superior Court.
The plaintiff purchased the property located at 152 Waldo Street in Providence in 2007. The plaintiff granted a mortgage on the property to Bank of America, N.A., to secure a $310,000 loan.1 Bank of America later assigned the mortgage to Christiana Trust. Selene Finance acted as the servicer for the loan. Two provisions in plaintiff's mortgage are pertinent to this appeal: paragraph 19 and paragraph 22.
Paragraph 22 of plaintiff's mortgage, entitled "Acceleration; Remedies[,]" is a nonuniform covenant developed for Rhode Island mortgages.2 According to paragraph 22, in the event of a default, the mortgagee must provide notice of default to the mortgagor before accelerating the note and conducting a foreclosure sale. Paragraph 22 also sets out certain information that must be included in the notice. Under paragraph 22, the notice of default must inform the mortgagor of:
Significantly, paragraph 22 mandates that the mortgagor be informed of the right to reinstate the mortgage after acceleration which, when accomplished, returns the mortgage to its pre-acceleration status and the monthly payments under the note.
Paragraph 19 of the mortgage, entitled "Borrower's Right to Reinstate After Acceleration[,]" sets out the conditions that must be satisfied to reinstate the mortgage after acceleration.3 Under paragraph 19, the borrower may reinstate the mortgage prior to the earliest of: (1) "five days before sale of the Property pursuant to any power of sale contained in this Security Instrument;" (2) "such other period as Applicable Law might specify for the termination of Borrower's right to reinstate;" or (3) "entry of a judgment enforcing this Security Instrument." Paragraph 19 also sets out the following conditions that the mortgagor must satisfy in order to reinstate the mortgage after acceleration:
Paragraph 19 further provides that "[u]pon reinstatement by Borrower, this Security Instrument and obligations secured hereby shall remain fully effective as if no acceleration had occurred."
In 2014, plaintiff became delinquent on the mortgage.4 On July 9, 2014, Selene Finance sent a notice of default and intent to accelerate to plaintiff.5 The notice informed plaintiff that the mortgage was in default "for failure to pay amounts due[,]" and it stated, "[t]o cure this default, you must pay all amounts due under the terms of your Note and Deed of Trust/Mortgage." The notice also informed plaintiff that he had forty-five days to cure the default, and of the specific date by which the default must be cured. Additionally, the notice informed plaintiff that, if he did not cure the default by that date, the mortgagee would accelerate the note and foreclose on the property. Finally, the notice declared: "You have the right to cure the default after acceleration and the right to bring a court action to claim that your loan is not in default or any other defense to acceleration and sale that you may have." The notice did not inform plaintiff that he had the right to reinstate the mortgage after acceleration.
After plaintiff failed to cure the default, Selene Finance sent a notice of acceleration to plaintiff on October 14, 2014. The plaintiff's property was sold at foreclosure sale on December 14, 2015. The plaintiff filed suit in Superior Court, alleging that the foreclosure sale was void because the default notice was deficient, and seeking a declaration that plaintiff was the owner of the property located at 152 Waldo Street.6 The plaintiff's claims—as well as the issues on appeal—centered on whether the notice of default complied with paragraph 22. The plaintiff alleged that the foreclosure sale was void because he did not receive proper notice of default in accordance with paragraph 22. The plaintiff contended that the default notice failed to inform him of his right to reinstate after acceleration. Because the notice failed to inform him of his right to reinstate the mortgage after acceleration as required by paragraph 22, plaintiff argued, the notice was insufficient, thus rendering the foreclosure sale void.
The defendants filed a motion to dismiss the complaint, which was later converted into a motion for summary judgment. On November 29, 2017, a justice of the Superior Court denied defendants' motion, concluding that questions of fact remained as to whether the default notice complied with paragraph 22 of the mortgage. The trial justice determined that the "right to reinstate after acceleration" is not equivalent to the "right to cure the default after acceleration[,]" because curing the default is only one of multiple steps that must be taken to reinstate after acceleration.
A few months later, defendants sought declaratory relief, contending that the default notice sent to plaintiff complied with the terms of the mortgage.7 The plaintiff objected to that motion and filed a motion for summary judgment. On June 29, 2018, a second trial justice granted defendants' motion for a declaratory judgment and denied plaintiff's motion for summary judgment. The second trial justice ruled that the default notice complied with paragraph 22 because it informed plaintiff of the right to cure the default after acceleration and the failure to use the word "reinstate" in the default notice did not render it deficient. An order entered on August 21, 2018, dismissing plaintiff's complaint, declaring the foreclosure sale valid, and declaring Christiana Trust the valid owner of 152 Waldo Street; plaintiff filed a timely appeal.8
This Court reviews a grant of summary judgment de novo . Beacon Mutual Insurance Company v. Spino Brothers, Inc. , 11 A.3d 645, 648 (R.I. 2011). "We view the evidence in the light most favorable to the nonmoving party; and, ‘if we conclude that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law,’ we will affirm the judgment." Allstate Insurance Company v. Ahlquist , 59 A.3d 95, 97 (R.I. 2013) (brackets omitted) (quoting Berman v. Sitrin , 991 A.2d 1038, 1043 (R.I. 2010) ).
On appeal, plaintiff argues that the trial justice erred in denying his motion for summary judgment and in granting defendants' motion for a declaratory judgment because the default notice failed to strictly comply with the requirements contained in paragraph 22 as a condition precedent to a valid foreclosure sale. The plaintiff reasons that the default notice failed to strictly comply with paragraph 22 because it did not inform him of the right to reinstate after acceleration. The plaintiff therefore contends that the foreclosure sale is void.
The defendants counter that the trial justice correctly ruled that the default notice complied with paragraph 22 because informing plaintiff of "the right to cure the default after acceleration" was tantamount to informing him of "the right to reinstate after acceleration." The defendants reason that, under paragraph 19, curing the default was the only condition that plaintiff would have needed to satisfy in order to reinstate the mortgage after acceleration.
Because this case presents a matter of first impression, we must first determine the appropriate standard to apply.9 In Rhode Island, upon default in the performance of the mortgage, a mortgagee may conduct a foreclosure sale of the property by exercising the statutory power of sale contained in G.L. 1956 § 34-11-22, so long as the mortgage contract itself gives the mortgagee the power to do so.10 See Bucci v. Lehman Brothers Bank, FSB , 68 A.3d 1069, 1084 (R.I. 2013) (). "[W]hether a contract is clear and unambiguous is a question of law." Beacon Mutual Insurance Company , 11 A.3d at 648. "A term in a contract is ambiguous when it is reasonably and clearly susceptible to more than one rational interpretation." Chariho Regional School District v. State , 207 A.3d 1007, 1015 (R...
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