Heritage Loan & Investment Co. v. Geremia (In re Norato)
Docket: Bankruptcy No. 7900460; Adv. No. 800180
Court: District Court, D. Rhode Island; June 4, 1981; Federal District Court
Arthur N. Votolato, Jr., Bankruptcy Judge, addressed a complaint from the Plaintiff seeking relief from the automatic stay to foreclose on a mortgage. The Defendants claim that the mortgage deed and promissory note were obtained through fraud and misrepresentation, and they assert the equitable defense of laches. Testimony from the Plaintiff’s Chairman, Joseph Mollicone, indicates that Alfred Norato defaulted on two unsecured loans totaling $4,845.00. Norato subsequently requested a new loan of $6,900.00 to consolidate these debts, agreeing to secure it with a mortgage on his property. After signing the mortgage deed, Norato received $2,070.00 in cash, which he preferred over a check for privacy regarding another creditor.
Despite the Plaintiff providing documentation including a signed mortgage deed, promissory note, and loan disclosure statement, the Defendants dispute the terms. Alfred Norato asserts that he did not receive cash from the loan and that the loan was only meant to consolidate earlier debts. He claims the disclosure statement was blank at the time of his signature and that the mortgage deed was executed earlier than stated. The Court found both parties' testimonies lacking in credibility but noted the significant testimony from Alfred G. Thibodeau, Esq., whose firm, Realty Data, Inc., conducted multiple title searches on the Defendants' property, providing relevant context to the case.
No title search was conducted, leading to the absence of a mortgage drafted for the Plaintiff in late 1977 or early 1978, which contradicts Norato’s claim of having signed a mortgage at that time. An April 1980 title search revealed a mortgage for $6,900.00, while Norato had requested a $10,000 loan, indicating a discrepancy in his testimony. The Defendants, asserting fraud as an affirmative defense, bear the burden of proof, which has not been satisfied based on the case facts. Additionally, the Defendants invoked laches, arguing that the Plaintiff delayed action until August 5, 1980, despite a bankruptcy petition filed on December 14, 1979, and a dischargeability complaint deadline of April 16, 1980. However, mere delay does not constitute laches without demonstrating specific harm or prejudice, which the Defendants failed to do. Ultimately, the Court found that a valid mortgage exists for $6,900.00 at 15% interest, which is in default, allowing the Plaintiff to foreclose on the Defendants' property. The Court noted that the Plaintiff’s counsel, Philip DeSano, is associated with Mr. Thibodeau from Realty Data and, despite potential objections regarding admissibility, the Court would have allowed Mr. Thibodeau’s testimony as it was primarily derived from Realty Data’s business records.
