Lister v. Bank of America, N.A.

United States Court of Appeals
For the First Circuit

No. 14-1448

DEBORAH A. LISTER; LEON ALAN BLAIS,

Plaintiffs, Appellants,

v.

BANK OF AMERICA, N.A., in its own right and as successor by
merger to BAC Loan Servicing, Inc.; MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; HOMEWARD RESIDENTIAL, INC., in its
own rights and as successor to American Home Mortgage Servicing,
Inc.; OCWEN LOAN SERVICING, LLC,

Defendants, Appellees,

NEIL F. LURIA, in his capacity as Liquidating Trustee of Chapter
11 Estate of Mortgage Lenders Network, USA, Inc.,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND

[Hon. John J. McConnell, Jr., U.S. District Judge]

Before

Howard, Selya, and Stahl,
Circuit Judges.

Leon A. Blais, with whom Blais & Parent was on brief, for
appellants.
Maura K. McKelvey, with whom Marissa I. Delinks and Hinshaw
& Culbertson LLP were on brief, for appellees Mortgage Electronic
Registration Systems, Inc.; Homeward Residential Inc., in its own
right and as successor to American Home Mortgage Servicing, Inc.;
and, OCWEN Loan Servicing, LLC.
Joseph F. Yenouskas, with whom George R. Schneider and Goodwin
Procter LLP were on brief, for appellee Bank of America, N.A.

June 12, 2015
 HOWARD, Circuit Judge. Claiming uncertainty as to which

entity holds an enforceable mortgage on their home, Deborah Lister

and Leon Blais filed suit against numerous potential mortgagees.1

The district court subsequently granted defendants' motions to

dismiss for failure to state a claim. See Lister v. Bank of

America, N.A., 8 F. Supp. 3d 74 (D.R.I. 2014). Lister and Blais

timely appealed, asserting several claims of error. We affirm the

dismissal, although for different reasons than those offered by

the district court.

I.

As we are reviewing the grant of a motion to dismiss, we

recite the facts as alleged in the complaint and documents

incorporated therein by reference.2 Grajales v. P.R. Ports Auth.,

1 Lister and Blais are married. Lister is the homeowner of
record and Blais asserts a leasehold interest in the subject
property. Blais, an attorney, represents Lister and also appears
pro se. For the sake of shorthand, we may occasionally refer to
both appellants by the first-named plaintiff, Lister.
2 Appellants take issue with the district court's
consideration of certain land records that appellees appended to
their motions to dismiss below. Their argument is misplaced. The
district court acted well within its discretion when it examined
copies of land records that were expressly referred to in the
complaint. See Beddall v. State Street Bank & Trust Co., 137 F.3d
12, 16-17 (1st Cir. 1998). Their claim rings especially hollow in
light of the fact that they also attached documents to the
complaint suggesting that certain mortgage-related evidence did
not exist.

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682 F.3d 40, 44 (1st Cir. 2012). In October 2000, Lister purchased

a parcel of property in Lincoln, Rhode Island, and recorded her

interest in the Town of Lincoln's Land Evidence Records. In 2006,

Lister refinanced and secured a new mortgage with Mortgage Lenders

Network ("MLN"). Lister alleges that neither the note nor the

mortgage were executed, witnessed, or notarized, and that she does

not have any recollection of signing the mortgage. Nevertheless,

she began making payments to the address listed on a document

entitled "First Payment Notice." After MLN filed for bankruptcy

in Delaware, Lister received notice to forward her mortgage

payments to Bank of America, and she did so.

In 2008, Lister "grew suspicious" about the handling of

the note and mortgage so she "slowed" her payments. In November

2008, Countrywide Home Loans contacted Lister and threatened to

foreclose. Shortly thereafter, Harmon Law Offices contacted

Lister and informed her that it represented Countrywide and

reiterated the foreclosure threat. On November 5, 2008, Blais

demanded verification from Harmon under the Fair Debt Collection

Practices Act and requested an accounting of funds previously paid.

Almost two years later, on September 10, 2010, under continued

threats of foreclosure, Blais again requested verification and an

accounting. Each request was ignored and Harmon pressed forward

with foreclosure proceedings until Mr. Blais threatened to

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initiate a lawsuit against Harmon and its attorneys. On November

4, 2010, Harmon "put on hold" the scheduled foreclosure sale. The

parties agree that there is no foreclosure currently pending.

Eventually, defendant Homeward began to communicate with

Lister, but ignored Blais's requests for verification. Lister's

most recent communication regarding the mortgage (at least before

this suit was initiated) came from defendant OCWEN, which inserted

itself as the loss payee on Lister's homeowner insurance policy.

In an attempt to determine the note holder, Lister wrote

to the liquidating trustee of MLN, who explained that after filing

for bankruptcy, all of MLN's documents had been destroyed.

Plaintiffs allege that since MLN's documents were destroyed, and

subsequent "holders" are not able to produce the documents, then

it is unlikely that the documents exist.

Plaintiffs filed suit, alleging three causes of action.

Count I seeks "Interim Relief," in which they agree to sell the

house and place the proceeds in the court registry or in escrow,

from which the debt to the holder of the note will later be

satisfied. In Count II, they seek "Quieting of Title" in order to

nullify the note and mortgage. In Count III, they request a

"Credit Reporting," where the court would declare that plaintiffs

owe nothing to defendants and that defendants would remove all

delinquent reports from their credit.

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 In ruling on defendants' motions to dismiss, the

district court directly considered only Count II (quiet title),

determining that it would be dispositive of the other counts.

After first rejecting Lister's claim that the mortgage and note

were void for never having been executed (executed copies were

attached to defendants' motions), the court went on to reach

several other legal conclusions: first, that plaintiffs' assertion

that the note was unenforceable because it cannot be produced is

contrary to Rhode Island law; second, that the facts alleged in

the complaint were insufficient to give plaintiffs' standing to

challenge the assignment of the mortgage; and finally, that the

mortgage was enforceable.

This timely appeal followed.3

II.

"Dismissal for failure to state a claim is appropriate

if the complaint does not set forth factual allegations, either

direct or inferential, respecting each material element necessary

to sustain recovery under some actionable legal theory." Lemelson

v. U.S. Bank Nat'l Ass'n, 721 F.3d 18, 21 (1st Cir. 2013) (internal

3 Pursuant to a request made at oral argument before this
court, the appellees provided Lister with updated information
respecting the holder of the note. Those documents, submitted to
us via a Fed. R. App. P. 28(j) letter, state that Freddie Mac is
the current owner of the note, though its counsel is holding the
instrument on its behalf.

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quotation marks omitted). We review the district court's Rule

12(b)(6) dismissal de novo, construing all factual allegations in

the complaint in the light most favorable to the non-moving party

to determine if there exists a plausible claim upon which relief

can be granted. Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1,

7 (1st Cir. 2014). In so doing, however, we disregard facts which

have been "conclusively contradicted by [plaintiffs'] concessions

or otherwise." Id. (quoting Soto-Negrón v. Taber Partners I, 339

F.3d 35, 38 (1st Cir. 2003)). As especially relevant here, we

will consider documents incorporated by reference into the

complaint and matters of public record. Id. (citing Giragosian v.

Ryan, 547 F.3d 59, 65 (1st Cir. 2008)). Finally, the district

court's rationale is not binding on appeal, and its ruling may be

affirmed on any basis apparent from the record. Freeman v. Town

of Hudson, 714 F.3d 29, 35 (1st Cir. 2013). Against this backdrop,

we turn to the appellate matters at hand.

III.

We start our analysis by quickly disposing of an array

of issues that appellants raise -- or fail to raise -- in their

briefs. First, appellants argue that discovery is needed to allow

them to uncover facts to support their claims. In so doing,

however, they ignore the fundamental premise of Rule 12(b)(6),

i.e., that the plaintiff must set forth sufficient factual matter

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to state a claim for relief that is plausible on its face. See

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). As will be discussed below,

Lister fails to do so and discovery would not alter that

conclusion.

Next, appellants suggest that rather than employing the

Rule 12(b)(6) legal framework described above, the district court

should have instead judged the complaint on what they call "the

extraordinarily low standard of [Rhode Island's] title quieting

statute." We should thus not impose a "requirement to cite to

dispositive facts in the complaint." Appellants' position flies

in the face of clear precedent, which holds that "state pleading

requirements, so far as they are concerned with the degree of

detail to be alleged, are irrelevant in federal court even as to

claims arising under state law." Andresen v. Diorio, 349 F.3d 8,

17 (1st Cir. 2003) (citing Hanna v. Plumer, 380 U.S. 460, 466-74

(1965)); see also Chhun v. Mortg. Elec. Registration Sys., Inc.,

84 A.3d 419, 422 (R.I. 2014) (acknowledging that the federal

standard for surviving motions to dismiss is more stringent than

the traditional Rhode Island standard).

As a final housekeeping matter, we note that while the

district court dismissed the complaint in its entirety, appellants

offer no argument with respect to Counts One ("Preliminary Relief")

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and Three ("Credit Reporting"). We therefore deem those claims

waived. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.

1990) ("[I]ssues adverted to in a perfunctory manner,

unaccompanied by some effort at developed argumentation, are

deemed waived.").

IV.

This leaves only Count Two, "Quieting of Title," before

us on appeal. Pursuant to Rhode Island law:

Any person or persons claiming title to real
estate, or any interest or estate, legal or
equitable, in real estate . . . may bring a
civil action against all persons claiming, or
who may claim, and against all persons
appearing to have of record any adverse
interest therein, to determine the validity of
his, her, or their title or estate therein, to
remove any cloud thereon, and to affirm and
quiet his, her, or their title to the real
estate. The action may be brought under the
provisions of this section whether the
plaintiff may be in or out of possession and
whether or not the action might be brought
under the provisions of § 34-16-1 or under the
provisions of any other statute.

R.I. Gen. Laws § 34-16-4 (1956).4

By its own terms, the Rhode Island statute requires

defendants in a quiet title action to have "an adverse interest"

4
In Rhode Island, the statute is often utilized when
challenging an easement, see, e.g., Caluori v. Dexter Credit Union,
79 A.3d 823 (R.I. 2013), or in the context of an adverse
possession, see, e.g., McGarry v. Coletti, 33 A.3d 140 (R.I. 2011).

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to that of the plaintiff. See also R.I. Gen. Laws § 34-16-5

(requiring quiet title complaint to contain, inter alia, "[a]

recital of the character and source of the claims adverse"). In

this specific case, the facts alleged in the complaint are

insufficient to make out a plausible showing of such an interest

(and, thus, are insufficient to state a claim upon which relief

can be granted).5

"Rhode Island is a title-theory state, in which 'a

mortgagee not only obtains a lien upon the real estate by virtue

of the grant of the mortgage deed but also obtains legal title to

the property subject to defeasance upon payment of the debt.'"

Bucci v. Lehman Bros. Bank, FSB, 68 A.3d 1069, 1078 (R.I. 2013)

(quoting 140 Reservoir Ave. Assoc. v. Sepe Inv., LLC, 941 A.2d

805, 811 (R.I. 2007)). Put another way, the title theory of

mortgage law "splits the title [to a property] in two parts: the

legal title, which becomes the mortgagee's and secures the

underlying debt, and the equitable title, which the mortgagor

retains." Lemelson, 721 F.3d at 23 (citing Bevilacqua v.

Rodriguez, 955 N.E.2d 884, 894 (Mass. 2011)) (internal quotation

marks omitted); see also Houle v. Guilbeault, 40 A.2d 438, 423

5
As Lister emphasizes throughout, this case does not arise
in the context of a foreclosure. We thus have no need to consider
how a foreclosure might alter the mortgagor-mortgagee relationship
in a quiet title proceeding.

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(R.I. 1944). A mortgagor can reacquire this defeasible legal title

by paying the debt which the mortgage secures. Lemelson, 721 F.3d

at 23-24 (citing Abate v. Freemont Inv. & Loan, No. 12 MISC

464855(RBF), 2012 WL 6115613, at *4 (Mass. Land Ct. Dec. 10,

2012)); see In re D'Ellena, 640 A.2d 530, 533 (R.I. 1994) (stating

that a mortgagee's legal interest is "subject to defeasance upon

payment of the debt").

The key to this case is determining the import of that

mortgagor-mortgagee relationship on the quiet title regime; an

issue we recently resolved with respect to Massachusetts law in

Lemelson. In that case, we held that given the concomitant

relationship that each has with respect to the property, the

mortgagor's and mortgagee's respective estates (or interests) are

not adverse, but instead are "prima facie consistent with each

other." Lemelson, 721 F.3d at 24 (quoting Dewey v. Bulkley, 67

Mass. (1 Gray) 416, 417 (1854)). This makes eminent sense given

the way title is split. The mortgagor and mortgagee each possess

"complementary" and "separate" claims; one party's interest (legal

or equitable), as a general rule, does not interfere with the

other's. See Lemelson, 721 F.3d at 24.

Though Lemelson interpreted Massachusetts' law to reach

that conclusion, Rhode Island's identical understanding of the

relationship between the mortgagor and mortgagee necessarily leads

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to the same understanding. See Andrew Robinson Int'l, Inc. v.

Hartford Fire Ins. Co., 547 F.3d 48, 52 (1st Cir. 2008) (noting

that, in a diversity case applying state law, "the federal court's

objective is not to choose the legal path it deems best, but,

rather, to predict what path the state court would most likely

travel").6 Indeed, we are hard-pressed to hypothesize a manner in

which Rhode Island's understanding of title could lead to a

different result. Lemelson, though only persuasive authority,

thus guides our resolution of this case.7

As noted at the outset, Lister's allegations ultimately

boil down to uncertainty over who holds the mortgage. But, while

Lister maintains an equitable interest in the property, she

relinquished legal title to it. Her assertions respecting

uncertainty over the mortgage speak solely to the legal title and

not to her equitable interest. There is thus not the "requisite

adversity to cloud [her] claim of equitable title." Lemelson, 721

F.3d at 24 n.7. Instead, while the economic interests of Lister

and the mortgagee might be adverse in the sense that she disputes

6 We are not aware of any reported case where a Rhode Island
court has expressly considered this question in this context.

7 We also note that though stylistically different, the
Massachusetts try-title statute is substantively analogous to the
Rhode Island law at issue here. Compare Mass. Gen. Laws ch. 240,
§ 1, with R.I. Gen. Laws § 34-16-4.

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owing any money, "[Lister] cannot be heard to argue that [the

mortgagee's] claim is adverse to [her] own" within the meaning of

the quiet title statute. Id. at 24. Her claim necessarily fails.

V.

The judgment of the district court is affirmed.

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