Webster Bank, Nat'l Ass'n v. Rosenbaum

268 A.3d 556

WEBSTER BANK, NATIONAL ASSOCIATION

v.Arnold S. ROSENBAUM et al.

No. 2020-117-Appeal.

PC 16-60

Supreme Court of Rhode Island.

February 16, 2022

Lisa M. Kresge, Esq., for Plaintiff.

Joseph F. Hook, Esq., for Defendants.

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

Justice Goldberg, for the Court.

This case came before the Supreme Court on November 9, 2021, on appeal by the defendants, Arnold S. Rosenbaum and Judith A. Rosenbaum (collectively defendants), who seek review of a Superior Court judgment denying their motion for summary judgment and granting summary judgment in favor of the plaintiff, Webster Bank, National Association. On appeal, the defendants contend that the trial justice erred in applying the Rhode Island ten-year statute of limitations pursuant to G.L. 1956 § 9-1-13, rather than the Connecticut six-year statute of limitations under Connecticut General Statutes § 52-576, application of which would have barred the plaintiff's action for breach of a loan agreement. For the reasons stated in this opinion, we affirm the judgment of the Superior Court.

Facts and Travel

On June 30, 2006, Arnold¹ entered into a Home Equity Consumer Revolving Loan Agreement and Disclosure Statement (the loan agreement) whereby plaintiff agreed to extend credit to Arnold in the maximum amount of $1 million, and Arnold agreed to repay in full upon the terms set forth in the loan agreement. The loan agreement was secured by a mortgage on property located in Portsmouth, Rhode Island. On May 30, 2008, both Arnold and Judith executed and delivered an Amended and Ratified Promissory Note (the amended note) that amended and restated the loan agreement by adding Judith as an obligor.

Pursuant to the amended note, defendants acknowledged and agreed that they were indebted to plaintiff for the amounts under the loan agreement and that they waived any defenses or offsets regarding notice. Since July 6, 2007, defendants have failed to make payments to plaintiff for the amounts extended under the loan agreement. Therefore, on January 6, 2016, plaintiff initiated an action in the Superior Court to recover under the loan agreement, which contained a choice-of-law clause providing, "Governing Law: Federal law and the law of the State of Connecticut (to the extent consistent with Federal law) govern this Agreement." The loan agreement did not dictate the choice of forum or the applicable statute of limitations that would govern. The defendants’ breach of the loan agreement is not in dispute; rather, the parties’ only point of contention is whether Rhode Island or Connecticut law should govern the statute of limitations applicable to plaintiff's claim against defendants.²

In the Superior Court, defendants claimed that, because the parties agreed that Connecticut law would govern the loan agreement, the Connecticut statute of limitations should apply. The parties therefore filed cross-motions for summary judgment regarding this choice-of-law issue, and, after conducting the interest-weighing test, the trial justice granted plaintiff's motion and denied defendants’ motion. The trial justice concluded that the balance tipped in plaintiff's favor on the issue and that the Rhode Island statute of limitations applied. Judgment in favor of plaintiff entered on November 15, 2019. The defendants timely appealed.

Standard of Review

"This Court reviews a grant of summary judgment de novo ." Sullo v. Greenberg , 68 A.3d 404, 406 (R.I. 2013) (brackets omitted) (quoting Sacco v. Cranston School Department , 53 A.3d 147, 149-50 (R.I. 2012) ). "Examining the case from the vantage point of the trial justice who passed on the motion for summary judgment, ‘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.’ " Id. at 406-07 (brackets omitted) (quoting Sacco , 53 A.3d at 150 ). "Summary judgment is appropriate only when the ‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.’ " Sola v. Leighton , 45 A.3d 502, 506 (R.I. 2012) (brackets omitted) (quoting Plunkett v. State , 869 A.2d 1185, 1187 (R.I. 2005) ). "Although summary judgment is recognized as an extreme remedy, * * * to avoid summary judgment the burden is on the nonmoving party to produce competent evidence that ‘proves the existence of a disputed issue of material fact.’ " Sullo , 68 A.3d at 407 (brackets omitted) (quoting Mutual Development Corporation v. Ward Fisher & Company, LLP , 47 A.3d 319, 323 (R.I. 2012) ).

In Harodite Industries, Inc. v. Warren Electric Corporation , 24 A.3d 514 (R.I. 2011), we held that, "[a]lthough * * * this Court has never indicated in so many words precisely what standard of review applies to a trial court's ruling as to a choice of law issue, our case law is replete with instances in which we in effect reviewed same on a de novo basis." Harodite Industries, Inc. , 24 A.3d at 529 (citing Najarian v. National Amusements, Inc. , 768 A.2d 1253, 1255 (R.I. 2001) ; Cribb v. Augustyn , 696 A.2d 285, 288 (R.I. 1997) ). Further, we noted that "the analysis of the policy considerations" under the interest-weighing approach "involves a pure issue of law," which we also review de novo . Id. at 530.

Analysis

On appeal, defendants argue that the trial justice erred in applying Rhode Island's ten-year statute of limitations to plaintiff's claim instead of Connecticut's six-year statute of limitations. The defendants claim that the agreement upon which plaintiff sued them expressly provides that it shall be governed by federal law and Connecticut state law and that, under Connecticut law, plaintiff's claim would be barred because more than six years had passed between defendants’ default in July 2007 and plaintiff's initiation of an action against them in January 2016.³ The defendants further contend that, even under the interest-weighing approach, the weight of the factors would indicate that the Connecticut statute of limitations is the most appropriate statute to apply.

The defendants cite to Martin v. Law Offices Howard Lee Schiff, P.C. , No. 11-484S, 2012 WL 7037743 (D.R.I. 2012) —a case from the United States District Court for the District of Rhode Island regarding a choice-of-law analysis—in support of their argument that the Rhode Island statute of limitations should not apply when the parties contractually agreed to another state's law as the governing law. In Martin , the court applied the interest-weighing approach and determined that the factors weighed in favor of applying Virginia's statute of limitations. Martin , 2012 WL 7037743, at *3, *4. This case, however, is neither binding upon this Court, nor comparable to our set of facts. In Martin , there were no facts to suggest that the defendant-creditor had offices in Rhode Island, and there was no connection to Rhode Island, except that the plaintiff had moved to Rhode Island after default on her credit-card payments and had filed the action in Rhode Island. Id.

The plaintiff contends that, absent a contractual provision specifically dictating a choice of law for procedural issues or the statute of limitations, Rhode Island courts should apply a choice-of-law analysis under the interest-weighing approach, which would favor the application of Rhode Island's statute of limitations in this case. The plaintiff also requests that this Court take this opportunity to adopt the majority rule of other states, which have held statutes of limitation to be procedural in nature and thus do not require a choice-of-law analysis.

ARhode Island's Choice-of-Law Rules

We have stated that "the procedural law of the forum state applies even if a foreign state's substantive law is applicable." Terrace Group v. Vermont Castings, Inc. , 753 A.2d 350, 353 (R.I. 2000) (quoting Israel v. National Board of Young Men's Christian Association , 117 R.I. 614, 620, 369 A.2d 646, 650 (1977) ). Generally, in Rhode Island, "parties are permitted to agree that the law of a particular jurisdiction will govern their transaction." Id. (quoting Sheer Asset Management Partners v. Lauro Thin Films, Inc. , 731 A.2d 708, 710 (R.I. 1999) ). "This Court previously has held that choice-of-law provisions are enforceable if the intention of the parties to stipulate to the jurisdiction is made clear by express language or by the ‘facts and circumstances attending the making of the contract.’ " DeCesare v. Lincoln Benefit Life Company , 852 A.2d 474, 481 (R.I. 2004) (emphasis omitted) (quoting Owens v. Hagenbeck-Wallace Shows Co. , 58 R.I. 162, 173-74, 192 A. 158, 164 (1937) ). There are limitations, however. Barring certain circumstances, Rhode Island will not apply the law of the chosen state if it contravenes fundamental public policy. See Commerce Park Realty, LLC v. HR2-A Corp. , 253 A.3d 1258, 1270 (R.I. 2021). Rhode Island also will not apply the law of the chosen state if "the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice." DeFontes v. Dell, Inc. , 984 A.2d 1061, 1067 (R.I. 2009) (quoting Sheer Asset Management Partners , 731 A.2d at 710 ).

In the absence of a contract where the parties agree to governing law, this Court will apply its forum choice-of-law rules. See DeCesare , 852 A.2d at 483-84. In conducting a choice-of-law analysis for tort cases, we have looked to the "interest-weighing" approach. See, e.g. , Harodite Industries, Inc. , 24 A.3d at 534. For contract cases, this Court has not adopted a definitive analysis. In DeCesare , we held that "[i]n the absence of a contractual stipulation about which law controls, Rhode Island's conflict-of-laws doctrine...