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Summers v. Financial Freedom Acquisition LLC

United States Court of Appeals, First Circuit

October 23, 2015

STEVEN SUMMERS, Plaintiff, Appellant,
v.
FINANCIAL FREEDOM ACQUISITION LLC, Defendant, Appellee, BRINAH COURT, Plaintiff, FINANCIAL FREEDOM SENIOR FUNDING CORP. and FINANCIAL FREEDOM SENIOR SERVICING CORP., Defendants

Page 352

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND. Hon. John J. McConnell, Jr., U.S. District Judge.

Carleen N. T. Aubee for appellant.

Harris K. Weiner, with whom Salter McGowan Sylvia & Leonard, Inc., was on brief, for appellee.

Before Howard, Chief Judge, Selya and Thompson, Circuit Judges.

OPINION

Page 353

SELYA, Circuit Judge.

Plaintiff-appellant Steven Summers and his sister Brinah Court inherited a house from their mother, Rosalie Summers (the decedent). The rub was that, during her lifetime, the decedent had obtained and reaped the benefits of a reverse mortgage. That mortgage, which contained an acceleration clause and power of sale, became due and payable upon her death.

After they inherited the property, the plaintiffs sought to take it free and clear of the mortgage lien even though the mortgage debt remained unpaid. They argued, among other things, that the mortgage was unenforceable because the mortgagee had failed to file a claim in the decedent's estate. Ruling on this question of first impression under Rhode Island law, the district court disagreed. So do we: the piper must be paid.

I. BACKGROUND

The relevant facts are, for all intents and purposes, undisputed. On November 4, 1977, the decedent and Charlotte T. Albeitsam took title as joint tenants with rights of survivorship to residential property at 11 Sundance Street, Warwick, Rhode Island (the Property). Following Albeitsam's death, the decedent entered into a reverse mortgage with Financial Freedom Senior Funding Corp. The mortgage instrument provided in pertinent part that the full amount of the debt would become due and payable upon the death of the borrower.[1]

On September 25, 2009, Financial Freedom Senior Funding Corp. assigned the mortgage to Mortgage Electronic Registration

Page 354

Systems, Inc. (MERS) as a nominee of Financial Freedom Acquisition.[2] The decedent died intestate on December 8, 2009. Her son and daughter applied for letters of administration and, pursuant to statute, the estate was duly advertised and notice was given to creditors. See R.I. Gen. Laws § 33-11-5.1. Neither Financial Freedom nor MERS filed a claim in the probate proceedings. See id. § 33-11-5. The estate was duly administered and closed, and the Warwick Probate Court granted the decedent's interest in the Property to the plaintiffs.

In late 2010, the plaintiffs received a notice of foreclosure. That notice was published in accordance with statute. See id. § 34-27-4. Foreclosure proceedings went forward, MERS reassigned the mortgage to Financial Freedom, and Financial Freedom recorded the foreclosure deed granting the Property to it in November of 2011.

Dismayed by this turn of events, the plaintiffs invoked diversity jurisdiction, see 28 U.S.C. § 1332(a), and repaired to the United States District Court for the District of Rhode Island. Their suit sought to contest both the validity of the serial mortgage assignments and the foreclosure itself. During pretrial discovery, Brinah Court dropped out of the case. See Fed.R.Civ.P. 41(a).

After the close of discovery, Financial Freedom moved for summary judgment. See Fed.R.Civ.P. 56(a). The district court, ruling ore tenus, granted summary judgment over Steven ...


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