Montaquila v. Flagstar Bank, FSB.

288 A.3d 967

Raymond Paul MONTAQUILA et al.

v.FLAGSTAR BANK, FSB.

No. 2021-329-Appeal.

PC 20-3517

Supreme Court of Rhode Island.

February 16, 2023

Todd S. Dion, Esq. for Plaintiff

Hames E. Manning, Esq., Pro Hac Vice; Thomas W. Lyons, Esq. for Defendant

Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.

Justice Lynch Prata, for the Court.

This case came before the Supreme Court on December 1, 2022, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. The plaintiffs, Raymond Paul Montaquila (Raymond) and Paula M. Montaquila (Paula) (collectively, the Montaquilas), appeal from a judgment of the Superior Court following the grant of defendant Flagstar Bank, FSB's (Flagstar) motion for judgment on the pleadings.¹ After considering the parties’ written and oral submissions and reviewing the record, we are satisfied that cause has not been shown and that the appeal may be decided at this time. For the reasons set forth herein, we affirm in part and vacate in part the judgment of the Superior Court.

Facts and Travel

On March 18, 2008, the Montaquilas obtained a mortgage loan in the amount of $206,755 (the Loan) from Flagstar, using their property located at 33 Zella Street, Providence, RI 02908 (the Property), as collateral.² The Loan included a mortgage document which provided that "[t]he Mortgagor is Raymond Paul Montaquila and Paula M Montaquila, whose address is 33 Zella St[reet,] Providence, RI 02908-2315 (‘Borrower’)." This document also contained a notice provision which stated that:

"Any notice to Borrower provided for in this Security Instrument shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to the Property Address or any other address Borrower designates by notice to Lender. Any notice to Lender shall be given by first class mail to Lender's address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Security Instrument shall be deemed to have been given to Borrower or Lender when given as provided in this paragraph."³

On October 20, 2016, the Montaquilas signed a partial claim mortgage, which, similar to the Loan, provided that "[t]he Mortgagor is Raymond Paul Montaquila and Paula M. Montaquila, whose address is 33 Zella Street, Providence, RI 02908 (‘Borrower’)." The partial claim mortgage also contained a notice provision nearly identical to that contained in the Loan.

According to Flagstar, on December 24, 2018, Flagstar sent Raymond a face-to-face-meeting letter by certified mail in accordance with 24 C.F.R. § 203.604(b), inviting him "to discuss potential loss mitigation options over the phone or to schedule a face-to-face interview at the loan servicing center nearest [him]."⁴ Soon after sending this face-to-face-meeting letter, on January 18, 2019, Flagstar visited the Property through a third-party vendor and left a door hanger at the Property. Subsequently, on April 9, 2019, Flagstar purportedly received authorization from the Rhode Island Housing Authority to proceed with a foreclosure action against the Property based on the Montaquilas’ failure "to respond to the request of the [Rhode Island Housing] Agency to appear for the Mediation Conference or otherwise participate in the Mediation Conference" pursuant to G.L. 1956 § 34-27-3.2. Consequently, on April 29, 2019, Flagstar sent both Raymond and Paula, via certified mail addressed to the Property, notice of Flagstar's intention to foreclose on the Property by power of sale. In accordance therewith, a foreclosure sale was conducted for the Property on June 24, 2019.

On April 28, 2020, the Montaquilas filed suit against Flagstar for wrongful acceleration, foreclosure, and sale of the Property. Thereafter, the Montaquilas filed a second amended complaint, alleging that Flagstar failed to comply with 24 C.F.R. § 203.604 by not sending Paula a face-to-face-meeting letter and by failing to provide the Montaquilas with an opportunity for a face-to-face meeting "via a trip to the Property for the specific purpose of arranging a face to face meeting." The Montaquilas also alleged that Flagstar's foreclosure on the Property violated G.L. 1956 §§ 34-11-22 and 34-27-4 because Flagstar sent Paula's notice of foreclosure to the address of the Property, rather than to Paula's address listed with the tax assessor's office for the City of Providence. Specifically, the Montaquilas alleged that:

"The last known address of Plaintiff, Paula M. Montaquila, that is also listed with the tax assessor's office of the City of Providence is 25 Enfield Avenue, Providence, RI 02908. A notice in accordance with R.I.G.L. § 34-11-22 and R.I.G.L. § 34-27-4 was not sent to Paula M. Montaquila at 25 Enfield Avenue, Providence, RI 02908. Plaintiffs further allege that Defendant had knowledge that 25 Enfield Avenue was Paula Montaquila's last known address and failed to send her the required notice at 25 Enfield."

After filing an answer to the Montaquilas’ second amended complaint, Flagstar filed a motion for judgment on the pleadings, arguing that the Montaquilas’ complaint should be dismissed with prejudice. The trial justice issued a bench decision granting Flagstar's motion and dismissing the Montaquilas’ complaint. With respect to the notice of foreclosure, the trial justice determined that Flagstar complied with the notice requirements contained in the mortgage contracts and, therefore, did not violate §§ 34-11-22 or 34-27-4. As to the face-to-face-meeting letter, the trial justice concluded that Flagstar was under no obligation to arrange a face-to-face meeting with Paula pursuant to 24 C.F.R. § 203.604(c)(1) because the Montaquilas specifically alleged that Paula resided somewhere other than at the Property. The trial justice additionally rejected the Montaquilas’ argument that the trip by the third-party vendor was insufficient, reasoning that the person making the trip need only be "prepared to * * * establish contact to arrange [a face-to-face] meeting" and that Flagstar had shown that the requirements of 24 C.F.R. § 203.604(d) had been satisfied.

An order consistent with the trial justice's bench decision entered on October 5, 2021, granting Flagstar's motion for judgment on the pleadings. On the same day, final judgment entered in favor of Flagstar. The Montaquilas filed a timely notice of appeal.⁵

Standard of Review

"Pursuant to Rule 12(c) of the Superior Court Rules of Civil Procedure, a hearing justice may ‘dispose of a case early in the litigation process when the material facts are not in dispute after the pleadings have been closed and only questions of law remain to be decided.’ "

Houle v. Liberty Insurance Corporation , 271 A.3d 591, 593 (R.I. 2022) (brackets omitted) (quoting Premier Home Restoration, LLC v. Federal National Mortgage Association , 245 A.3d 745, 748 (R.I. 2021) ); see also Nugent v. State Public Defender's Office , 184 A.3d 703, 706 (R.I. 2018). "For the purposes of our review[,] a Rule 12(c) motion is tantamount to a Rule 12(b)(6) motion, and the same test is applicable to both." Chase v. Nationwide Mutual Fire Insurance Company , 160 A.3d 970, 973 (R.I. 2017) (brackets and deletion omitted) (quoting Chariho Regional School District v. Gist , 91 A.3d 783, 787 (R.I. 2014) ).

"When reviewing the decision of a hearing justice on a motion for judgment on the pleadings pursuant to Rule 12(c), we utilize the Rule 12(b)(6) motion-to-dismiss test." Houle , 271 A.3d at 593 (brackets omitted) (quoting Nugent , 184 A.3d at 706 ). "That is, we confine ourselves to the four corners of the complaint, assume that the allegations set forth are true, and resolve any doubts in favor of the complaining party." Chase , 160 A.3d at 973 (quoting Tri-Town Construction Company v. Commerce Park Associates 12, LLC , 139 A.3d 467, 478 (R.I. 2016) ); see also Narragansett Electric Company v. Minardi , 21 A.3d 274, 278 (R.I. 2011). "A motion to dismiss may be granted only when it is established beyond a reasonable doubt that a party would not be entitled to relief from the defendant under any set of conceivable facts that could be proven in support of its claim." Chase , 160 A.3d at 973 (quoting Tri-Town Construction Company , 139 A.3d at 478 ).

"Ordinarily, when ruling on a motion to dismiss brought under Rule 12(b)(6) or Rule 12(c), ‘a court may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment.’ " Chase , 160 A.3d at 973 (quoting Alternative Energy, Inc. v. St. Paul Fire & Marine Insurance Co. , 267 F.3d 30, 33 (1st Cir. 2001) ). "There is, however, a narrow exception for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs’ claim; or for documents sufficiently referred to in the complaint." Id . (quoting Alternative Energy, Inc. , 267 F.3d at 33 ).

Discussion

On appeal, the Montaquilas challenge the trial justice's decision to grant Flagstar's motion for judgment on the pleadings on two points: (1) that the trial justice erred in finding that Flagstar complied with §§ 34-11-22 and 34-27-4(b) in mailing Paula a notice of foreclosure to the Property; and (2) that the trial justice erred in finding that Flagstar complied with 24 C.F.R. § 203.604 by sending only Raymond a face-to-face-meeting letter and leaving a door hanger at the Property that apparently failed to mention, among other things, the door hanger's purpose. The Montaquilas contend that the trial justice erred in finding that Flagstar complied with §§ 34-11-22 and 34-27-4(b) by sending Paula's notice of foreclosure to the Property, rather than to her last known address listed with the tax assessor's office. Specifically, the Montaquilas argue that the notice provision...