Porter v. First Nlc Financial Services

Citation: Not availableDocket: C.A. No. PC 10-2526

Court: Superior Court of Rhode Island; March 31, 2011; Rhode Island; State Appellate Court

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Plaintiff Osaretin A. Porter has filed a Complaint containing three counts: seeking a declaratory judgment to quiet title on the property at 739 Manton Avenue, Providence, Rhode Island; claiming tortious interference with a residential lease; and alleging predatory lending. The case arises from a challenge to a foreclosure sale conducted by Mortgage Electronic Registration Systems (MERS) on July 24, 2009. 

Key facts include: 
- On December 18, 2006, Porter executed a promissory note for $247,500 with First NLC Financial Services, securing it with a mortgage naming MERS as the mortgagee. 
- Porter leased the property to third parties from December 1, 2007, to November 30, 2008, during which it was under Section 8 Federal Housing Assistance.
- Porter filed for Chapter 13 Bankruptcy three times between January and July 2009, with the third petition pending during the foreclosure sale.
- On July 24, 2009, after Porter defaulted on payments, MERS conducted the foreclosure sale, becoming the highest bidder, later assigning the bid to Beltway Capital, LLC, which received the property.

Currently, Defendants MERS and Beltway have filed a Motion for Summary Judgment, arguing there are no genuine issues of material fact. The court will grant this motion only if the evidence, viewed favorably towards Porter, shows no material fact dispute, placing the burden on Porter to demonstrate such disputes with competent evidence.

To successfully contest a summary judgment motion, the opposing party must present substantial evidence to dispute material facts rather than mere legal conclusions. Defendants argue for dismissal based on MERS' authority to foreclose as the mortgagee and nominee of the lender. The Plaintiff counters, claiming genuine issues of material fact regarding the validity of MERS' self-interested transaction, potential tortious interference with tenant contracts, and predatory lending practices by First NLC Services in violation of Rhode Island law. The Plaintiff asserts that First NLC's bankruptcy filing terminated its agency with MERS, rendering the foreclosure invalid due to MERS lacking the note or mortgage deed at the time of sale and the absence of a recorded power of attorney or assignment from First NLC. Additionally, the Plaintiff alleges coercive actions by Defendants against her tenants. Despite these assertions, the Plaintiff has not provided affidavits or evidence to support her claims, relying instead on sparse legal citations. The Court finds the reasoning in Bucci v. Lehman Bros. Bank persuasive and analogous to the case at hand, deciding to grant Defendants' Motion for Summary Judgment based on this rationale, which aligns with previous court decisions regarding MERS' standing to foreclose.

The holding confirms that the Plaintiff, having borrowed funds for her home and defaulted on the Note, cannot contest the foreclosure process, which she agreed would result from nonpayment. The Mortgage language, signed by the Plaintiff, authorizes MERS to execute the statutory power of sale, reinforcing that the mortgage constitutes a contract. When contract terms are clear and unambiguous, courts apply them as written, ending judicial interpretation. MERS is explicitly designated as the mortgagee and nominee for the lender and its successors, granted the right to foreclose. The Plaintiff's argument that First NLC's bankruptcy disrupted MERS's authority lacks evidentiary support and legal citation. Consequently, the Plaintiff is bound by her agreement allowing MERS to initiate foreclosure. Furthermore, the assertion that Rhode Island statutes do not recognize MERS as a statutory mortgagee is unfounded and lacks legal backing. MERS's role as nominee does not alter its capacity as mortgagee.

G.L. 34-11-22 permits the mortgagee, including executors, administrators, and assigns, to exercise the Power of Sale in a mortgage. The court finds that MERS, although not the lender, may act as the mortgagee and nominee for the lender, thus validly invoking the statutory power of sale during foreclosure proceedings. The court references Justice Silverstein's reasoning in Bucci, emphasizing that interpreting the statute as the Plaintiff suggests would yield absurd results and disrupt established commercial practices involving mortgage servicers. 

Regarding the Plaintiff's claim for tortious interference due to tenant lease terminations following foreclosure, the court outlines the necessary elements for such a claim: existence of a contract, knowledge of the contract by the alleged wrongdoer, intentional interference, and resulting damages. The court concludes that the foreclosure was lawful, with no evidence of intentional interference from Defendants, and finds that the tenant's departure was incidental to the lawful foreclosure rather than a result of Defendant's actions. 

Consequently, the court grants Defendants' Motion for Summary Judgment as to all counts of the Plaintiff's Complaint, leading to the dismissal of the Complaint. Prevailing counsel is instructed to submit an Order and Form of Judgment in accordance with the ruling. The court also notes the lack of evidence regarding the alleged bankruptcy of First NLC Financial Services, LLC, and indicates that the broader economic context does not strip the lender of rights upon borrower default.