Raymond Paul Montaquila v. Flagstar Bank, FSB. ( 2023 )

February 16, 2023
Supreme Court
No. 2021-329-Appeal.
(PC 20-3517)
Raymond Paul Montaquila et al. :
v. :
Flagstar Bank, FSB. :
NOTICE: This opinion is subject to formal revision
before publication in the Rhode Island Reporter. Readers
are requested to notify the Opinion Analyst, Supreme
Court of Rhode Island, 250 Benefit Street, Providence,
Rhode Island 02903, at Telephone 222-3258 or Email
opinionanalyst@courts.ri.gov of any typographical or
other formal errors in order that corrections may be made
before the opinion is published.
Supreme Court
No. 2021-329-Appeal.
(PC 20-3517)
Raymond Paul Montaquila et al. :
v. :
Flagstar Bank, FSB. :
Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.
OPINION
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
1
The Montaquilas will be referred to individually by their first names for
convenience. No disrespect is intended. Moreover, for clarity purposes, it should
be noted that Raymond and Paula are mother and son and not husband and wife.
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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
2
The Montaquilas executed a mortgage with Flagstar as the lender and Mortgage
Electronic Registration Systems as the mortgagee.
3
The mortgage document also contained a governing law provision, which provided
that “[t]his Security Instrument shall be governed by Federal law and the law of the
jurisdiction in which the Property is located.”
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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
4
Paragraph 9(d) of the Loan incorporated by reference regulations of the Secretary
of the Department of Housing and Urban Development, including 24 C.F.R.
§ 203.604.
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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
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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
5
The Montaquilas filed a premature notice of appeal on September 16, 2021, prior
to the October 5, 2021 entry of judgment. Because judgment ultimately entered,
the Court treats this appeal as timely. Premier Home Restoration, LLC v. Federal
National Mortgage Association, 245 A.3d 745, 747 (R.I. 2021).
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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));
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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 787).
“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
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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 contained in § 34-27-
4(b) expressly requires that notice be sent to “the address of the real estate and,
if different, at the mortgagor’s address listed with the tax assessor’s office of the
city or town where the real estate is located * * *.” Section 34-27-4(b).
The Montaquilas maintain that their factual pleadings, which must be taken as true
and viewed in the light most favorable to them, clearly allege that Flagstar failed to
comply with §§ 34-11-22 and 34-27-4(b) by not sending notice to Paula’s last
known address, which was listed with the tax assessor’s office as 25 Enfield
Avenue, Providence, RI 02908.
In response, Flagstar argues that the trial justice correctly concluded that it
complied with the statutory notice requirements set forth in §§ 34-11-22 and 34-27-
4(b) because the parties’ pleadings demonstrated that Paula never informed Flagstar
that she was not living at the Property. Further, Flagstar maintains that the notice
requirements contained in the mortgage documents align completely with the
statutory notice requirements, and, thus, because the trial justice found Flagstar to
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have complied with the notice requirements contained in the mortgage documents,
Flagstar also complied with the statutory notice requirements set forth in §§ 34-11-
22 and 34-27-4(b). Therefore, according to Flagstar, the trial justice correctly
concluded that it complied with the applicable statutory notice provisions because
notice of the sale was sent via certified mail, return receipt requested, to Paula at her
last known address.
At the outset, we note that the statutory power of sale set forth in § 34-11-22,
although not required, may be incorporated into any mortgage by reference.
See § 34-11-22; see also Bucci v. Lehman Brothers Bank, FSB, 68 A.3d 1069, 1084
(R.I. 2013). “This Court has construed notice requirements contained in contracts
as requiring strict compliance as a condition precedent.” Woel v. Christiana Trust,
as Trustee for Stanwich Mortgage Loan Trust Series 2017-17, 228 A.3d 339, 345
(R.I. 2020). “[S]trict compliance with the notice requirements in a mortgage is
especially important given that Rhode Island is a nonjudicial foreclosure state.” Id.Thus, “[b]ecause mortgagees in Rhode Island may accelerate the mortgage and
conduct a foreclosure sale without immediate judicial oversight,” compliance with
notice requirements “prevents mortgagees from accelerating and foreclosing without
first providing a notice * * * that adequately informs the mortgagor of his or her
rights under the mortgage contract.” Id. at 345-46.
-9-
In concluding that Flagstar complied with §§ 34-11-22 and 34-27-4, the trial
justice explained that the right to exercise the power of sale in a mortgage contract
is derived from contract, not statute. The trial justice reasoned that both the 2008
and 2016 mortgage documents contained identical language concerning notice and
that Flagstar complied with these notice provisions when it sent Paula the
notice of foreclosure, via certified mail, addressed to the Property. The parties
do not dispute that the mortgage documents, specifically Paragraph 18 of the
Loan and Paragraph 7 of the partial claim mortgage, incorporated by reference
the statutory power of sale. However, the parties do dispute whether the
notice requirements contained in the mortgage documents align with the
statutory notice requirements contained in § 34-27-4(b). The notice provision
contained in the Loan provided 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.”
Similarly, the notice provision contained in the partial claim mortgage
provided 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
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Property Address or any other address Borrower
designates by notice to Lender.”
Section 34-27-4(b), however, provides that:
“[N]o notice shall be valid or effective unless the
mortgagor has been mailed written notice of the time and
place of sale by certified mail return receipt requested at
the address of the real estate and, if different, at the
mortgagor’s address listed with the tax assessor’s office
of the city or town where the real estate is located or any
other address mortgagor designates by written notice to
mortgagee at his, her, or its last known address * * *.”
(Emphasis added.)
While all three notice provisions required Flagstar to mail notice to the
Property’s address, or any other address the Montaquilas might designate by notice,
a plain reading of § 34-27-4(b) makes clear that, if the mortgagor’s address is
different from the address of the real estate, the mortgagee must mail written notice
of the sale to both the address of the real estate, as well as the mortgagor’s address
listed with the tax assessor’s office. See Peter Scotti & Associates, Inc. v. Yurdin,
276 A.3d 915, 926 (R.I. 2022) (“We end the process of statutory construction upon
concluding that a statute has a plain meaning because our ultimate goal is to give
effect to the General Assembly’s intent * * *.”) (quoting State v. Diamante, 83 A.3d
546, 550 (R.I. 2014)). This is true even though the notice provisions contained in
the mortgage documents did not expressly impose such a requirement because the
mortgage documents incorporated §§ 34-11-22 and 34-27-4 by reference, with strict
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compliance required. See Woel, 228 A.3d at 345-46 (holding that mortgagees must
strictly comply with notice requirements contained in mortgage contracts).
In deciding Flagstar’s motion for judgment on the pleadings, the trial justice
was confined to the four corners of the complaint, was required to assume that the
allegations set forth therein were true, and to resolve any doubts in favor of the
complaining party. Chase, 160 A.3d at 973; Tri-Town Construction Company,
139 A.3d at 478. In the instant case, the Montaquilas alleged that Paula’s last known
address listed with the tax assessor’s office was 25 Enfield Avenue, not the Property.
While Flagstar denied this allegation in its answer, there was nothing in the
pleadings definitively resolving what address was listed with the tax assessor’s
office at the time Flagstar mailed Paula the notice of foreclosure. 6 At this stage in
the litigation, the trial justice was required to resolve this disputed material fact in
favor of the Montaquilas, as the complaining party, and the failure to do so was
erroneous. The procedural posture of a motion for judgment on the pleadings
requires the trial justice to take as true all the allegations contained in the
nonmovant’s pleadings, and to resolve any disputed facts in favor of the nonmovant
in ruling on the motion. See Heritage Healthcare Services, Inc. v. Beacon Mutual
6
Similarly, the parties disputed in their pleadings whether Flagstar was aware
whether Paula was residing at the Property or not. This is another disputed material
fact that should have been resolved in favor of the Montaquilas in ruling on a motion
for judgment on the pleadings.
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Insurance Co., 109 A.3d 373, 377 (R.I. 2015) (“The court must accept that ‘the
factual allegations contained in the nonmovant’s pleadings are admitted as true for
purposes of the motion,’ and ‘all proper inferences are to be drawn in favor of the
nonmovant.’”) (brackets and deletion omitted) (quoting Haley v. Town of Lincoln,
611 A.2d 845, 847 (R.I. 1992)). For these reasons, we vacate the decision of the
Superior Court in this regard, and remand this matter for further proceedings.
With respect to the Montaquilas’ contention that Flagstar violated 24 C.F.R.
§ 203.604 by not sending Paula a face-to-face-meeting letter, § 203.604(c) sets
forth instances in which a face-to-face meeting is not required. See 24 C.F.R.
§ 203.604(c). Specifically, 24 C.F.R. § 203.604(c)(1) provides that no face-to-face
meeting is required if the mortgagor does not reside at the mortgaged property.
See id. In the instant case, the Montaquilas specifically alleged that Paula’s last
known address was 25 Enfield Avenue, not the Property. Assuming this fact is true,
as the trial justice correctly did, the Montaquilas are not entitled to the relief
they seek. Put simply, if Paula did not reside at the Property, she was not entitled
to receive a face-to-face-meeting letter.
Finally, with respect to any argument relative to the sufficiency of notice as to
Raymond pursuant to 24 C.F.R. § 203.604, the pleadings are clear that
Raymond resided at the Property, that Raymond received a certified face-to-face-
meeting letter, and that a door hanger was left at the Property by a third-party vendor.
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As the trial justice correctly noted, 24 C.F.R. § 203.604(d) merely requires the
person making the trip to the property be prepared to establish contact to
arrange a face-to-face meeting. See 24 C.F.R. § 203.604(d). Specifically, 24 C.F.R.
§ 203.604(d) states that, “[s]uch a reasonable effort to arrange a face-to-face
meeting shall also include at least one trip to see the mortgagor at the mortgaged
property * * *.” Id. Indeed, the door hanger left at the Property by the third-party
vendor evidences the fact that at least one trip was made to see Raymond at the
Property. Therefore, we are satisfied that Raymond received sufficient notice and
that Flagstar complied with 24 C.F.R. § 203.604(d). For these reasons, the trial
justice did not err in concluding that Flagstar complied with 24 C.F.R. § 203.604 in
sending only Raymond a face-to-face-meeting letter.
Conclusion
For the foregoing reasons, we affirm in part and vacate in part the judgment
of the Superior Court, and remand this case for further proceedings consistent with
this opinion. The record shall be returned to the Superior Court.
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STATE OF RHODE ISLAND
SUPREME COURT – CLERK’S OFFICE
Licht Judicial Complex
250 Benefit Street
Providence, RI 02903
OPINION COVER SHEET
Raymond Paul Montaquila et al. v. Flagstar Bank,
Title of Case
FSB.
No. 2021-329-Appeal.
Case Number
(PC 20-3517)
Date Opinion Filed February 16, 2023
Suttell, C.J., Goldberg, Robinson, Lynch Prata, and
Justices
Long, JJ.
Written By Associate Justice Erin Lynch Prata
Source of Appeal Providence County Superior Court
Judicial Officer from Lower Court Associate Justice Richard D. Raspallo
For Plaintiffs:
Todd S. Dion, Esq.
Attorney(s) on Appeal For Defendant:
Jason E. Manning, Esq., Pro Hac Vice
Thomas W. Lyons, Esq.
SU-CMS-02A (revised November 2022)