U.S. Bank N.A., as Trustee for the Registered Holders of the Structured Asset Securities Corporation, Structured Asset Investment Loan Trust, Mortgage Pass-Through Certificates, Series 2003-BC11 v. Shakoori-Naminy a/k/a Shakoori et al
Filing
88
FINDINGS OF FACT AND CONCLUSIONS OF LAW: Plaintiff is entitled to equitable assignment of the mortgage. Defendant's Motion in Limine and Motion for Default Judgment and Sanctions, ECF No. 57 , is GRANTED IN PART and DENIED IN PART, and Defendant's Motion in Limine, ECF No. 58 , is DENIED. Finally, Plaintiff's request for attorneys' fees is DENIED. So Ordered by District Judge William E. Smith on 11/16/2022. (Urizandi, Nissheneyra)
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 1 of 25 PageID #: 3356
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
)
)
)
)
)
Plaintiff,
)
)
v.
)
)
MASOUD SHAKOORI-NAMINY a/k/a
)
MASOUD SHAKOORI, BRENDA
)
SHAKOORI-NAMINY, and SAND CANYON
)
CORPORATION,
)
)
Defendants.
)
___________________________________)
U.S. BANK N.A., as Trustee for the
Registered Holders of the
Structured Asset Securities
Corporation, Structured Asset
Investment Loan Trust,
Mortgage Pass-Through
Certificates, Series 2003-BC11,
C.A. No. 17-394 WES
FINDINGS OF FACT AND CONCLUSIONS OF LAW
WILLIAM E. SMITH, District Judge.
This matter came before the Court for a bench trial in April
2022.
the
Plaintiff U.S. Bank N.A. asks the Court to find that it is
holder
of
Defendant
equitable assignment
Masoud
Shakoori-Naminy’s
so that it may pursue
Defendant’s property in Exeter, Rhode Island.
mortgage
by
a foreclosure on
The trial, held
over two days, featured testimony by Defendant himself, see Apr.
5 Tr. 33:16-17, and Plaintiff’s witness Howard Handville, a senior
loan analyst at Ocwen Financial Corporation, see Apr. 18 Tr. 2:20–
24, 4:13-16.
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 2 of 25 PageID #: 3357
Having considered the exhibits, witness testimony, and the
parties’ written submissions, the Court concludes that Plaintiff
is entitled to equitable assignment of the mortgage.
Furthermore,
Defendant’s Motion in Limine and Motion for Default Judgment and
Sanctions, ECF No. 57, is GRANTED IN PART and DENIED IN PART, and
Defendant’s Motion in Limine, ECF No. 58, is DENIED.
I.
Findings of Fact1
A. Origination and Modification of Mortgage Loan
On December 26, 2000, Defendant purchased property located at
1541 Ten Rod Road in Exeter, Rhode Island (“the property”).
PXA.
On November 5, 2001, he obtained a loan from Finance America, LLC,
in the amount of $243,750, secured by a mortgage on the property.
PXB; Apr. 5 Tr. 35:3-37:19.
On July 16, 2003, Defendant obtained a $315,400 loan (“the
loan”) from Option One Mortgage Corporation (“Option One”) and
executed an Adjustable Rate Note (“the note”) payable to Option
One on the same day.
49:25.
PXC; Apr. 5 Tr. 39:1-7, 47:15-16, 48:24–
Defendant’s initials appear on the first two pages of the
note, and his signature appears on the third page.
Tr. 40:3-17.
PXC; Apr. 5
Attached to the note is an allonge2 also dated July
Some facts not presented in this section are reserved for
later discussion and incorporated as additional findings of fact.
1
An allonge is “[a] slip of paper sometimes attached to a
negotiable instrument for the purpose of receiving further
2
2
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16, 2003, that contains an indorsement in blank3 signed by Mary
Conway,
Assistant
Secretary
of
Option
One.
PXC.
Neither
Defendant’s initials nor his signature appear on the allonge, and
he testified that the allonge was not attached to the note when he
signed it.
Id.; Apr. 5 Tr. 46:10-16.
Defendant also executed a mortgage (“the mortgage”) on the
property to secure the loan.
PXD; Apr. 5 Tr. 49:20-24.
Option
One was the holder of the mortgage, and the mortgage was recorded
in the Town of Exeter Land Evidence Records.
PXD; Apr. 5 Tr. 39:1-
4.
From the proceeds of the loan, $248,054.40 was paid to Finance
America, LLC, extinguishing Defendant’s liability on his earlier
mortgage loan.
PXE; PXF; Apr. 5 Tr. 50:11-19.
The remaining
balance, $53,602.25, was paid to Defendant. PXE; Apr. 5 Tr. 50:2022, 52:3-5.
In December 2008, after defaulting on the loan, Defendant
entered into a modification agreement with American Home Mortgage
indorsements when the original paper is filled with indorsements.”
Note Cap. Grp., Inc. v. Perretta, 207 A.3d 998, 1000 n.4 (R.I.
2019) (quoting Black’s Law Dictionary 92 (10th ed. 2014)).
“An [i]ndorsement in blank is one that does not identify a
person to whom it makes the instrument payable. When indorsed in
blank, an instrument becomes payable to bearer and may be
negotiated by transfer of possession alone until specially
indorsed.” Mruk v. Mortg. Elec. Reg. Sys., Inc., 82 A.3d 527, 530
n.3 (R.I. 2013) (internal citations and quotations omitted).
3
3
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Servicing, Inc. (“AHMSI”), which was the servicer for the loan at
the time.
PXQ; Apr. 5 Tr. 56:12-17, 59:3-9.
Following the
modification, Defendant resumed making payments to AHMSI for an
unknown amount of time, but, as of the time of this trial, had not
made any mortgage payments in over ten years.
Apr. 5 Tr. 63:18-
22, 65:14-16.
B. Defendant’s Bankruptcy
Between
2008
and
2015,
Defendant
filed
three
bankruptcy
petitions in the United States Bankruptcy Court for the District
of Rhode Island (“Bankruptcy Court”).4
PXO; PXT; PXU; PXBB.
On
December 31, 2015, in connection with his third petition, the
Bankruptcy Court issued a Chapter 7 discharge of all debts.
PXDD;
see Apr. 5 Tr. 104:14-19.
II.
Conclusions of Law
A. Equitable Assignment of Mortgage
“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
[R.I. Gen. Laws] § 34-11-22, so long as the mortgage contract
itself gives the mortgagee the power to do so.”
Woel v. Christiana
On the second petition, Defendant listed LaSalle Bank as a
creditor, PXT, PXU, and on the third petition, he listed Ocwen
Mortgage Company as a creditor, PXBB, both entities associated
with the mortgage.
4
4
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Tr. as Tr. for Stanwich Mortg. Loan Tr. Series 2017-17, 228 A.3d
339,
344–45
(R.I.
2020).
The
parties
do
not
dispute
that
Defendant’s mortgage gives the mortgagee the power to foreclose.
See PXD at 1.
However, under the terms of the mortgage, this power
is granted only to the lender, in this case Option One, and its
“successors and assigns.”
Id. at ¶ 12.
Therefore, to have the
authority to conduct a foreclosure sale, Plaintiff must establish
that it is either a successor or assignee of the original mortgagee
through a valid chain of transfers or assignments of the mortgage,
or that it is entitled to equitable assignment of the mortgage.
Plaintiff pursues only the latter option and asks the Court to
find that it is the holder of Defendant’s mortgage by equitable
5
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 6 of 25 PageID #: 3361
assignment.5,
6
1. Possession of Note
“[W]here a note has been assigned but there is no written
In its Amended Complaint, Plaintiff asked the Court to find
that it is entitled to equitable assignment of the mortgage nunc
pro tunc as of either October 1, 2003, when the mortgage was
purportedly securitized and deposited into trust, December 15,
2008, when AHMSI attempted to assign the mortgage to LaSalle Bank,
or February 22, 2013, when LaSalle Bank attempted to assign the
mortgage to Plaintiff as Trustee. Am. Compl. ¶ 77, ECF No. 26.
Plaintiff has presented no evidence that it was the holder of the
note on any of these dates.
“Because U.S. Bank fails to cite
authority in support of its position and provides no explanation
for its request, the [C]ourt sees no reason . . . to allow the
. . . equitable assignment nunc pro tunc.” U.S. Bank Tr. N.A. v.
Bedard, No. 18-cv-30033-MGM, 2018 WL 6682836 at *2 n.2 (D. Mass.
Dec. 4, 2018), adopted 2018 WL 6682769 (D. Mass. Dec. 19, 2018).
5
Although Plaintiff does not ask the Court to find that it
is the holder of the mortgage on the basis of title, Plaintiff
nonetheless presented numerous exhibits at trial, including
assignment agreements (PXG and PXH), trust documents (PXI and PXM),
and a loan schedule (PXK) in an attempt to demonstrate that it “is
the current holder of the mortgage loan” by virtue of its position
as trustee of the trust into which the mortgage has been deposited.
Apr. 5 Tr. 4:6-10.
In a claim for equitable assignment of a
mortgage, a plaintiff need only prove that it is the holder of the
note and entitled to enforce it; if a plaintiff is able to prove
that it is the holder of the mortgage, there is no need for an
equitable assignment. See discussion infra.
Even if these exhibits were relevant, they are not helpful to
Plaintiff’s case.
Although the assignment agreements evidence
assignments between various entities that purportedly held the
mortgage, the exhibits do not show that the original mortgagee,
Option One, ever assigned the mortgage to any other entity. “Thus,
based on the documents submitted . . . Option One, not U.S. Bank,
[is] the mortgage holder.” U.S. Bank Nat’l Ass’n v. Ibanez, 941
N.E.2d 40, 52 (Mass. 2011) (concluding that because of gap in chain
of assignments, plaintiff failed to establish that it held
mortgage).
Defendant filed two Motions in Limine challenging the
admission of these exhibits on the grounds of voidness of the
6
6
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assignment of the mortgage underlying the note, the assignment of
the note does not carry with it the assignment of the mortgage.”
U.S. Bank Nat’l Ass’n v. Ibanez, 941 N.E.2d 40, 54 (Mass. 2011).7
Instead, the holder of a promissory note has an equitable right to
obtain the assignment of the mortgage
equitable assignment.8
under the doctrine of
Id. at 54; see also Culhane v. Aurora Loan
assignments, Def.’s Mot. Lim. & Mot. Default J. 7-10, ECF No. 57,
lack of authentication, Def.’s Mot. Lim. 2-6, ECF No. 58, and
hearsay, id. at 6, and he renewed these objections at trial. Apr.
18 Tr. 68:5–18, 77:18–19. Because the exhibits are ultimately
irrelevant to the outcome of this case, Defendant’s Motions in
Limine, ECF Nos. 57 and 58, insofar as they concern Exhibits G, H,
I, K, and M, are DENIED as MOOT.
Plaintiff also introduced evidence concerning Defendant’s
three bankruptcy petitions, asserting that because he listed
LaSalle Bank and Ocwen Mortgage Company as creditors, this evidence
“demonstrate[s] that Mr. Shakoori himself . . . has acknowledged
and admitted” that these entities were the holder or servicer of
the mortgage when the petitions were filed. Apr. 5 Tr. 8:13-9:5.
Because the holder of the mortgage is irrelevant in a claim for
equitable assignment, this evidence is similarly unhelpful.
The Rhode Island Supreme Court has cited to and relied upon
the Massachusetts Supreme Judicial Court’s (“SJC”) decision in
Ibanez specifically, see, e.g., Pimental v. Deutsche Bank National
Trust Co., 174 A.3d 740, 744 (R.I. 2017), and on SJC cases more
broadly concerning mortgage and foreclosure disputes, see Woel v.
Christiana Trust, 228 A.3d 339, 346-47 (R.I. 2020) (relying on
Pinti v. Emigrant Mortgage Co., 33 N.E.3d 1213 (Mass. 2015), as
“instructive” on foreclosure issue); Bucci v. Lehman Bros. Bank,
FSB, 68 A.3d 1069, 1085 (R.I. 2013) (relying on Eaton v. Fed.
National Mortgage Ass’n, 969 N.E.2d 1118 (Mass. 2012), regarding
right to foreclose). Following that practice, the Court likewise
relies on Ibanez for guidance on equitable assignment.
7
If the holder of the note does not obtain an equitable
assignment of the mortgage from a court (or a valid written
assignment), the “the mortgage holder remains unchanged” and the
7
8
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Servs. of Neb., 708 F.3d 282, 292 (1st Cir. 2013) (when mortgage
and note are held by separate entities, “[t]he noteholder possesses
an equitable right to demand and obtain an assignment of the
mortgage.
This makes perfect sense:
if the debtor-mortgagor
defaults, the noteholder needs to control the mortgage in order to
enforce its bargained-for security interest and collect the debt.”
(internal
citation
omitted)).
The
party
seeking
equitable
assignment of the mortgage must file an action in court for an
equitable order of assignment.
Ibanez, 941 N.E.2d at 53.
The
party must also be entitled to enforce the note under the Uniform
Commercial Code.
See R.I. Gen. Laws § 6A-3-301 (2000).
To
demonstrate such an entitlement, the party must prove that they
are either (i) the holder of the note, (ii) a non-holder of the
note but nonetheless in possession, or (iii) a person or entity
not in possession of the note but nonetheless entitled to enforce
it.
Id.
See Lister v. Bank of Am., N.A., 8 F. Supp. 3d 74, 80
(D.R.I. 2014) (“[M]ere possession of the note may entitle that
person to enforce the terms and conditions contained within the
note” under § 6A-3-301.).
At trial, Plaintiff presented evidence demonstrating that it
is the holder of the note. Specifically, it presented the original
mortgagee “holds the mortgage in trust for the purchaser of the
note.” Ibanez, 941 N.E.2d at 54.
8
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 9 of 25 PageID #: 3364
note, which was authenticated by Defendant through his testimony
that the document appeared to be the original note and that he
recalled signing it.
See PXC; Apr. 5 Tr. 39:17-19, 46:19-25.
The
allonge, which includes an indorsement in blank, was attached to
the note, and the allonge was authenticated through Handville’s
testimony.
See PXC; Apr. 18 Tr. 87:24-90:6.
Handville also
testified to the loan servicer’s maintenance of promissory notes
in “collateral files,” the general process of transferring such
files from the document custodian to the servicer and to counsel,
and the specific transfer of the original note that occurred in
this case to Plaintiff’s counsel.
Apr. 18 Tr. 90:7-93:16.
This
evidence is sufficient to establish that Plaintiff is the holder
of the note.
2. Enforcement of Note
Defendant claims, however, that even if Plaintiff is the
holder of the note, the note is unenforceable due to a defective
indorsement.
An indorsement is “a signature . . . for the purpose
of (i) negotiating the instrument, (ii) restricting payment of the
instrument,
instrument.”
or
(iii)
incurring
indorser’s
R.I. Gen. Laws § 6A-3-204(a).
liability
on
the
If an indorsement
does not identify a person to whom it makes the instrument payable,
it is a “blank indorsement.”
R.I. Gen. Laws § 6A-3-205(b).
“When
indorsed in blank, an instrument becomes payable to bearer and may
9
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 10 of 25 PageID #: 3365
be negotiated by transfer of possession alone.”
Id.
See Mruk v.
Mortg. Elec. Reg. Sys., Inc., 82 A.3d 527, 530 n.3 (R.I. 2013).
Therefore, the entity that holds a note that has been indorsed in
blank has the right to enforce the note.
The signature need not be on the instrument itself for the
indorsement to be effective.
purpose
of
determining
Under Rhode Island law, “[f]or the
whether
a
signature
is
made
on
an
instrument, a paper affixed to the instrument is a part of the
instrument.”
R.I. Gen. Laws § 6A-3-204(a).
known as an “allonge.”
This affixed paper is
See Note Cap. Grp. V. Perretta, 207 A.3d
998, 1000 n.4 (R.I. 2019) (quoting Black’s Law Dictionary 92 (10th
ed. 2014)); see also supra at note 2.
Defendant asserts two arguments for the invalidity of the
note:
first, that the allonge containing the indorsement in blank
was not affixed to the note at the time of signing, see Apr. 5 Tr.
19:9-20:16, and second, that the indorsement occurred before the
three-day right of rescission passed and is therefore void or
voidable,
see
Apr.
5
Tr.
21:12-24:3.
Neither
argument
is
availing.9
Relying on the definition of “allonge” provided by the Rhode
A third argument asserted by Defendant is that Mary Conway,
whose signature appears on the allonge, was an employee of Option
One in its Tampa, Florida office and was not in Rhode Island on
the day that the note and allonge were purportedly signed. See
10
9
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Island Supreme Court in Perretta, Defendant asserts that the
allonge must be affixed to the note before the signature is placed
on the allonge. See Apr. 5 Tr. 20:2-5. The sole evidence presented
at trial as to whether the allonge was affixed to the note, other
than the note itself with the allonge attached, was Defendant’s
testimony.
Defendant stated that he had never seen the allonge to
the note, and that he did not see the allonge when he signed the
note.
Apr. 5 Tr. 46:10-18.
“The
Court’s
independent
research
identifies
no
[Rhode
Island] or [First] Circuit authority establishing the method of
attachment necessary to create an effective [i]ndorsement” by
allonge, Livonia Prop. Holdings, LLC v. 12840-12976 Farmington Rd.
Holdings, LLC, 717 F. Supp. 2d 724, 734 (E.D. Mich. 2010), and
identifies no authority establishing when the allonge must be
attached
to
the
note
to
create
an
effective
indorsement.
Regardless, even if the allonge was not physically attached to the
note
at
or
soon
after
execution,
courts
faced
with
similar
questions have held that so long as “information on [the] allonge
indicates an intent to serve as an [i]ndorsement of the . . .
note,” the indorsement is effective.
Kohler v. U.S. Bank Nat.
Ass’n, No. 11-C-0893, 2013 WL 3179557 at *5 (E.D. Wis. June 21,
Apr. 5 Tr. 20:22-21:7. Defendant presented no evidence to support
this argument, so the Court rejects it.
11
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 12 of 25 PageID #: 3367
2013).
Where “the allonge[] presented to the Court w[as] attached
to the [n]ote” and where the allonge makes unambiguous reference
to the note, “given the clear intent that the [n]ote and [a]llonges
were to be physically attached, the evidence is insufficient to
invalidate the [i]ndorsement[].”
Livonia Prop. Holdings, 717 F.
Supp. 2d at 734 (applying Michigan statute identical in relevant
part to R.I. Gen. Laws § 6A-3-204(a)).
Here, the allonge was attached to the original note that was
presented to the Court, and the allonge references the note by
listing the borrower’s name, loan number, property address, loan
amount, note date, and servicing number.
See PXC.
Therefore, the
evidence presented by Plaintiff is sufficient to validate the
indorsement.10
Defendant also asserts that the note is void or voidable
because the indorsement occurred before the conclusion of the
The legislative history of Rhode Island’s statute supports
this conclusion.
The final sentence of R.I. Gen. Laws § 6A-3204(a), stating that “a paper affixed to the instrument is part of
the instrument,” was added to the statute in 2000, see P.L. 2000,
ch. 238, § 3, and was “based on subsection (2) of former Section
3-202.”
R.I. Gen. Laws § 6A-3-204(a), cmt. 1.
Prior to the
amendment, § 3-202 mandated that “[a]n indorsement must be written
. . . on the instrument or on a paper so firmly affixed thereto as
to become a part thereof.” R.I. Gen. Laws § 6A-3-202 (1999). “The
change in language suggests an intent to expand, rather than
restrict, the use of allonges.” Livonia Prop. Holdings, LLC v.
12840-12976 Farmington Rd. Holdings, LLC, 717 F. Supp. 2d 724, 734
n.10 (E.D. Mich. 2010).
10
12
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three-day rescission period. See Apr. 5 Tr. 21:12-24:9. The Truth
in Lending Act, 15 U.S.C. § 1601 et seq., provides a right of
rescission for a consumer entering into “any consumer credit
transaction. . . in which a security interest . . . is or will be
retained or acquired in any property which is used as the principal
dwelling of” the consumer.
15 U.S.C. § 1635(a).
The consumer
“shall have the right to rescind the transaction until midnight of
the
third
business
day
following
the
consummation
of
the
transaction.” Id. “When an obligor exercises his right to rescind
. . . any security interest given by the obligor . . . becomes
void.”
Id.
§ 1635(b).
Defendant contends that because the
allonge, dated July 16, 2003, was executed on the same day as the
note, also dated July 16, 2003, the indorsement on the allonge
could not be effective because the loan was not funded until the
rescission period expired and, thus, there was no consideration
for the note.
See Apr. 5 Tr. 21:12-24:9.
Defendant’s argument reflects a fundamental misunderstanding
of a right of rescission.
A right of rescission does not prevent
a contract from forming until the expiration of the rescission
period.
Rather, it gives a party to the contract the ability to
unmake the contract within the specified timeframe and return to
the status quo ante.
See In re Sheedy, 801 F.3d 12, 21 (1st Cir.
2015) (rescission “is the ‘unmaking’ or ‘voidance’ of a contract”);
13
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McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 421 (1st
Cir. 2007) (“Rescission essentially restores the status quo ante;
the creditor terminates its security interest and returns any
monies paid by the debtor in exchange for the latter’s return of
all
disbursed
funds
or
property
interests.”).
In
addition,
Defendant has presented no evidence to support his assertion that
the loan was not funded until the expiration of the rescission
period and that there was no consideration for the note on the day
it
was
signed.
Therefore,
because
the
three-day
right
of
rescission did not prevent the contract from being formed or the
loan from being funded, it is not a basis on which to invalidate
the indorsement.
3. Equitable Factors
The final inquiry as to whether Plaintiff is entitled to
equitable assignment of the mortgage is balancing the equitable
factors.
The determination of whether to grant equitable relief
rests within the discretion of the trial judge.
of East Providence, 593 A.2d 55, 57 (R.I. 1991).
Ruggieri v. City
A trial judge’s
determination should be guided by “basic principles of equity and
justice,” should balance the equities by “weighing hardships to
either side,” and should only grant relief in the absence of an
adequate legal remedy.
Chavers v. Fleet Bank (RI), N.A., 844 A.2d
14
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 15 of 25 PageID #: 3370
666, 679 (R.I. 2004).
The decision to grant equitable assignment of the mortgage to
Plaintiff
does
not
result
in
unfair
hardship
to
Defendant.
Defendant has lived on the property without making payments on his
mortgage for at least ten years.
Apr. 5 Tr. 65:14-16.
The Court
“echo[s] the First Circuit’s language to describe the necessary
outcome in this situation: ‘the piper must be paid.’”
Pimentel v.
Deutsche Bank Nat’l Tr. Co., 174 A.3d 740, 745-46 (R.I. 2017)
(quoting Summers v. Fin. Freedom Acquisition LLC, 807 F.3d 351,
353 (1st Cir. 2015)).
In addition, because Plaintiff is unable to
demonstrate that it is the holder of the mortgage by chain of
title, see supra at note 6, there is no adequate legal remedy.
See Chavers, 844 A.2d at 679.
Therefore, because Plaintiff is the
holder of the note, the indorsement on the note is effective,
equitable assignment of the mortgage to Plaintiff will result in
no unfairness to Defendant, and there is no adequate legal remedy,
Plaintiff is entitled to equitable assignment of the mortgage.11
B. Defendant’s Motions in Limine
The Court next addresses the remaining issues in Defendant’s
Although the equitable assignment of the mortgage to
Plaintiff will enable it to foreclose on the property, Defendant
is not personally liable for the outstanding balance of the loan
because his debt was discharged after his third bankruptcy
petition. See PXDD.
11
15
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Motions in Limine.12
Defendant’s first motion seeks to preclude
Plaintiff
from
asserting
certain
arguments
statements
in
Defendant’s
request
for
that
admissions;
contradict
Defendant
contends that these statements should be deemed admitted because
Plaintiff failed to timely respond to the request for admissions.
Def.’s Mot. Lim. & Mot. Default J. (“Def.’s First Mot. Lim.”) 3,
10, ECF No. 57.
The motion also requests sanctions against
Plaintiff for failing to timely respond and providing deficient
answers to interrogatories.
Id. at 15-28.
Defendant’s second
motion seeks to preclude the admission of certain of Plaintiff’s
exhibits on the grounds of lack of authentication, hearsay, and
inaccuracy.
Def.’s Mot. Lim. (“Def.’s Second Mot. Lim”) 2, 6, ECF
No. 58.13
1. Request for Admissions
Defendant
asserts
that
his
request
for
admissions
were
transmitted to Plaintiff’s counsel on May 19, 2018, and that
because the request was not responded to within the thirty days
See supra at note 6 regarding the disposition of the other
issues in Defendant’s motions in limine.
12
The motions challenge thirteen exhibits in total. Six of
these exhibits (exhibits J, L, EE, FF, GG, and HH) were not
introduced by Plaintiff at trial. Insofar as Defendant’s motions
challenge these exhibits, they are DENIED as MOOT. In addition,
while both motions list the note (PXC) as an exhibit that should
be excluded, neither make an argument as to why.
Therefore,
insofar as the motions concern this exhibit, they are DENIED.
13
16
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allotted under Rule 36(a) of the Federal Rules of Civil Procedure,
all statements contained therein should be deemed admitted. Def.’s
First Mot. Lim 3.
Plaintiff does not dispute that it failed to
timely respond to Defendant’s request for admission but asserts
that any delay in the responses stemmed from a good faith and
extended effort to settle the case.
See Pl.’s Resp. Def.’s Mot.
Lim. (“Pl.’s First Resp.”) 2, ECF No. 60.
“Under Federal Rule of Civil Procedure 36(a), after a party
serves a written request for admission, ‘[a] matter is admitted
unless, within 30 days after being served, the party to whom the
request is directed serves on the requesting party a written answer
or objection . . . .”
Foss v. Marvic Inc., 994 F.3d 57, 63 (1st
Cir. 2021) (quoting Fed. R. Civ. P. 36(a)).
“A matter admitted
under [Rule 36] is conclusively established unless the court, on
motion, permits the admission to be withdrawn or amended.”
R. Civ. P. 36(b).
Fed.
“District courts have considerable discretion
over whether to permit withdrawal or amendment of admissions made
pursuant to Rule 36.”
Farr Man & Co. v. M/V Rozita, 903 F.2d 871,
876 (1st Cir. 1990).
Here, however, Plaintiff has not moved to
withdraw the admissions.
Therefore, insofar as Defendant’s First
Motion in Limine requests that these statements be admitted, the
motion is GRANTED.
However, the statements have little effect on the case.
17
Of
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the
forty-five
admitted
statements,
forty-one
pertain
to
the
mortgage, assignments of the mortgage, and the trust in which the
mortgage is purportedly held.
Because the assignments of the
mortgage are irrelevant in a claim for equitable assignment, their
admission does not materially affect the outcome of this case.
The four remaining statements pertain to the note:
1. On December 15, 2008, Option One was not owed any
indebtedness under the Defendant’s note.
2. On December 15, 2008, Option One did not own
Defendant’s note.
. . .
25. On December 15, 2008 Sand Canyon did not own
Defendant’s note.
. . .
29. La Salle Bank as Trustee never purchased Defendant’s
note from Sand Canyon at any time.
Def.’s First Mot. Lim. 3-5.
However, these statements also do not
materially affect the outcome of this case.
In order to establish
ownership of the note, a party is not required to demonstrate the
chain of title to the note; it need only show that it holds the
note and is entitled to enforce it, which Plaintiff has done here
by presenting the original note that is indorsed in blank.
See
discussion supra. Therefore, whether any of the entities mentioned
in these statements were owed debt on the note, owned the note, or
transferred the note at any point prior to Plaintiff’s possession
of the note is inconsequential to Plaintiff’s present ownership of
18
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the note.
2. Discovery Sanctions
Defendant next asserts that sanctions in the form of dismissal
or exclusion of evidence should be imposed against Plaintiff for
its deficient discovery responses.
28.
See Def.’s First Mot. Lim. 15–
Specifically, Defendant contends that Plaintiff failed to
respond
to
Defendant’s
request
for
interrogatories
for
three
years, id. at 13, and that when it did, the responses suffered
from various deficiencies.14
In addition, Defendant contends that
Plaintiff failed to provide him with documents concerning the
securitization of the mortgage, id. at 18-20, 26–27, 29-31, and
that he was not provided with documents regarding the custodian or
travel of the note and allonge, id. at 32–33.
Because the evidence that Defendant requests be excluded due
to
Plaintiff’s
deficient
discovery
responses
was
either
not
admitted, see supra at note 13, or was ultimately irrelevant to
the equitable assignment claim, see supra at note 6, the Court
considers only Defendant’s request for dismissal of Plaintiff’s
These deficiencies include failure to identify persons with
whom the answerer consulted, Def.’s First Mot. Lim. 15, answers
that are inconsistent with the Complaint, id. at 16, 26–27, answers
that are inconsistent with Plaintiff’s proposed findings of fact,
id. at 17–18, 26-28, answers that constitute vouching for
fraudulent and void assignments, id. at 17, and deliberate refusal
to provide information, id. at 19.
14
19
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claim.
Rule 37 of the Federal Rules of Civil Procedure provides
a mechanism for parties to move to compel discovery responses and
also provides for sanctions if a party does not comply with a
discovery order issued by the court or fails to provide answers to
interrogatories.
Fed. R. Civ. P. 37(a), (b), (c), (d).
sanctions can include dismissal of the case.
These
See Fed. R. Civ. P.
37(b)(2)(A)(v), (c)(1)(C), (d)(3); Companion Health Servs., Inc.
v. Kurtz, 675 F.3d 75, 84 (1st Cir. 2012).
“Dismissal . . . is a
harsh sanction, which should be employed only when a plaintiff's
misconduct has been extreme . . .”
Malot v. Dorado Beach Cottages
Assocs., 478 F.3d 40, 44 (1st Cir. 2007) (citation omitted).
The
First Circuit has “recognized a number of litigation behaviors
that
comprise
‘extreme
misconduct’
warranting
dismissal,”
in
particular, “extremely protracted inaction (measured in years),
disobedience
of
court
contumacious conduct.”
orders,
ignorance
of
warnings,
[and]
Vazquez-Rijos v. Anhang, 654 F.3d 122,
127–28 (1st Cir. 2011) (quoting Cosme Nieves v. Deshler, 826 F.2d
1, 2 (1st Cir. 1987)).
Plaintiff’s
misconduct.”
conduct
here
does
not
constitute
“extreme
Although Defendant alleges that Plaintiff failed to
respond to interrogatories for three years, see Def.’s First Mot.
Lim. 13, this delay does not constitute “protracted inaction.”
Rather, the delay is attributable to the parties’ ongoing efforts
20
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to settle the case.
In addition, Defendant has not demonstrated
that Plaintiff disobeyed a court order, ignored warnings, or acted
with disregard for authority.
See Vazquez-Rijos, 654 F.3d at 127-
28 (failure to serve defendant for three years plus ignoring court
orders and warnings warranted sanction of dismissal).
Therefore,
dismissal
case,
is
not
an
appropriate
sanction
in
this
and
Defendant’s motion, insofar as it requests dismissal, is DENIED.
3. Remaining Challenge to Evidence
All but one of the evidentiary issues raised by Defendant
have been rendered moot, either because the exhibits he challenges
are irrelevant to the issue of equitable assignment, see supra at
note 6, or because Plaintiff did not introduce the exhibits at
trial, see supra at note 13.
The remaining exhibit challenged by
Defendant is the Loan Payment History of Defendant’s loan.
PXR.
See
Defendant argues that the Loan Payment History should not be
admitted
because
it
is
inaccurate;
the
document
consists
of
information from four loan servicers of Defendant’s loan, and at
least one servicer has admitted in other proceedings that its
electronic system of record is not accurate.
Def.’s Second Mot.
Lim. 9–10.
Plaintiff’s introduction
accompanying
testimony
of this exhibit and
served
primarily
to
Handville’s
establish
that
Defendant’s loan has been in default since 2011 based on a failure
21
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 22 of 25 PageID #: 3377
to make monthly mortgage payments.
regardless
of
whether
the
Loan
Apr. 18 Tr. 86:5-18.
Payment
History
is
However,
accurate,
Defendant admitted as much in his own testimony, stating that he
had not made a payment on his mortgage loan in at least ten years
and acknowledging that payments are still owed until August 1,
2033, the final payment date listed on the note.
11, 65:14-16; PXC.
Apr. 5 Tr. 42:3-
Therefore, even declining to consider the Loan
Payment History, the evidence is sufficient to establish that
Defendant is in default on the loan, and Defendant’s Motion in
Limine, ECF No. 58, is DENIED insofar as it concerns Exhibit R.
C. Attorney’s’ Fees
Finally, Plaintiff argues that it is entitled to an award of
attorneys’ fees under the terms of the mortgage.
Pl.’s Proposed
Concl. Law ¶¶ 11–12, ECF No. 53.
Evaluating the clear and unambiguous terms of a contract is
a question of law.
Under Rhode Island law, a contract term “is
ambiguous when it is reasonably and clearly susceptible to more
than one rational interpretation.”
Woel, 228 A.3d at 345.
In
evaluating whether the contract language is ambiguous, courts
“give words their plain, ordinary, and usual meaning.”
Id.
While Plaintiff is correct that the terms of the mortgage are
unambiguous, it is incorrect about what the mortgage unambiguously
says.
Plaintiff asserts that the sixth paragraph of the mortgage
22
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entitles it to an award of attorneys’ fees.15
Concl. of L. 12.
See Pl.’s Proposed
The clause of paragraph six relevant to costs
and fees is applicable to three scenarios.
First, it dictates
that the borrower shall “appear in and defend any action or
proceeding purporting to affect the property or any portion thereof
15
The relevant clause of paragraph six provides, in full:
Borrower shall, at Borrower’s own expense, appear
in and defend any action or proceeding purporting to
affect the property or any portion thereof or Borrower’s
title thereto, the validity or priority of the lien
created by this Security Instrument, or the rights or
powers of Lender with respect to this Security
Instrument or the property.
All causes of action of
Borrower, whether accrued before or after the date of
this Security Instrument, for damage or injury to the
Property or any part thereof, or in connection with any
transaction financed in whole or in part by the proceeds
of the Note or any other note secured by this Security
Instrument, by Lender, or in connection with or
affecting the Property or any part thereof, including
causes of action arising in tort or contract and causes
of action for fraud or concealment of a material fact,
are, at Lender’s option, assigned to Lender, and the
proceeds thereof shall be paid directly to Lender who,
after deducting therefrom all its expenses, including
reasonable attorneys’ fees, may apply such proceeds to
the sums secured by this Security Instrument or to any
deficiency under this Security Instrument or may release
any monies so received by it or any part thereof, as
Lender may elect. Lender may, at its option, appear in
and prosecute in its own name any action or proceeding
to enforce any such cause of action and may make any
compromise or settlement thereof.
Borrower agrees to
execute such further
assignments and any other
instruments as from time to time may be necessary to
effectuate the foregoing provisions and as Lender shall
request.
PXD at ¶ 6.
23
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 24 of 25 PageID #: 3379
or Borrower’s title thereto, the validity or priority of the lien
created by this Security Instrument, or the rights or powers of
Lender[16]
with
respect
to
this
property,” at his own expense.
Security
Instrument
or
the
Although this case does concern
“the rights or powers of Lender with respect to this Security
Instrument or the property,” this sentence only mandates that the
borrower pay his own costs, not that he must also pay the lender’s
costs or attorneys’ fees.
Second, the clause states that at the
lender’s option, all of the borrower’s causes of action related to
the property may be assigned to the lender, and the lender is
entitled to pay its costs, including reasonable attorneys’ fees,
from the proceeds.
This case was not a cause of action by the
borrower that was assigned to the lender, so this scenario is
inapplicable.
Finally, the clause provides that the lender is
entitled to “appear in and prosecute in its own name any action or
proceeding to enforce any” of the borrower’s causes of action, but
this scenario makes no mention of an entitlement to attorneys’
fees.
Therefore,
Plaintiff
is
not
entitled
to
an
award
of
“Lender” as used in the mortgage also encompasses an
assignee of the mortgage.
See PXD at ¶ 12 (“The covenants and
agreements of this Security Instrument shall bind and benefit the
successors and assigns of Lender and Borrower . . . .”).
16
24
Case 1:17-cv-00394-WES-LDA Document 88 Filed 11/16/22 Page 25 of 25 PageID #: 3380
attorneys’ fees under the language of the mortgage.17
III. Conclusion
For the foregoing reasons, Plaintiff is entitled to equitable
assignment of the mortgage.
Defendant’s Motion in Limine and
Motion for Default Judgment and Sanctions, ECF No. 57, is GRANTED
IN PART and DENIED IN PART, and Defendant’s Motion in Limine, ECF
No. 58, is DENIED.
Finally, Plaintiff’s request for attorneys’
fees is DENIED.
IT IS SO ORDERED.
William E. Smith
District Judge
Date: November 16, 2022
Plaintiff has not suggested, and the Court has not
identified, any other provisions of the mortgage that would entitle
it to an award of attorneys’ fees.
17
25
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