United States District Court, D. Rhode Island
Pickett filed suit against several financial institutions and
mortgage servicers seeking $207, 241.02 in insurance proceeds
he alleges he was due after an accidental fire damaged his
home in Jamestown, Rhode Island. All Defendants, Ditech
Financial, LLC ("Ditech"), Residential Credit
Solutions, Inc. ("RCS"), Bank of America
Corporation ("BAC"), and The Bank of New York Mellon
Corporation ("BONY') have moved to dismiss under
Federal Rules of Civil Procedure 12(b)(6). ECF Nos. 32, 33.
January 9, 2007, Mr. Pickett obtained a loan for $423, 000
from America's Wholesale Lender for property located in
Jamestown, R.I. ("Property"). The parties entered
into a uniform Mortgage Security Instrument
("mortgage"). In compliance with Section 5 of the
mortgage, Mr, Pickett insured the Property through the
Fireman's Fund Insurance Company ("FFIC"). The
Mortgage Electronic Registration System ("MERS")
assigned the mortgage on August 25, 2010 to The Bank of New
York Mellon as Trustee for the Benefit of Alternative Loan
Trust 2007-7T2 Mortgage Pass-Through Certificates, Series
about July 20, 2014, the Property sustained serious damage
due to an accidental fire. ECF No. 30. Mr. Pickett alleges
that beginning on or about July 27, 2014, and for some time
thereafter, a licensed general contractor performed
restoration and repairs to the Property. On or about
September 3, 2014, Mr. Pickett alleges that FFIC released
insurance proceeds of $207, 241.02 to RCS and BAC. However,
RCS and/or BAC never disbursed the monies to Mr. Pickett or
his contractor. Section 5 states, "[d]uring such repair
and restoration period, Lender shall have the right to hold
such insurance proceeds until Lender has had an opportunity
to inspect such Property to ensure work has been completed to
Lender's satisfaction, provided that such inspection
shall be iindertaken promptly." ECF No. 32-3 at
Mr. Pickett alleges that the Lender failed to inspect the
5 of the mortgage further states, "if the Lender
acquires the Property under Section 22 or otherwise, the
Borrower hereby assigns to the Lender (a) Borrower's
rights to any insurance proceeds in an amount not to exceed
the amounts unpaid under the Note or this Security
Instrument." Id. Mr. Pickett defaulted on his
mortgage. After default, the mortgagee applied the Proceeds
to the outstanding principle balance and neither Mr. Pickett
nor his contractor received any of the insurance proceeds.
Pickett filed a multi-count complaint, later amended, for
negligence, breach of contract, conversion, unjust
enrichment, and vicarious liability against all Defendants,
alleging that these institutions' failure to turn over
the insurance proceeds so that he could pay his contractor
was in violation of the mortgage contract and common law. All
remaining Defendants have moved to dismiss. ECF Nos. 32, 33.
Mr. Pickett objected to both motions. ECF Nos. 34, 35.
Standard of Review
survive a motion to dismiss for failure to state a claim, a
complaint must contain "sufficient factual matter,
accepted as true, to state a claim to relief that is
plausible on its face." Bell Atl. Corp. v.
Twombly 550 U.S. 544, 570 (2007). At the same time, the
Court "must accept a plaintiffs allegations as true and
construe them in the light most favorable to them."
Gargano v. Liberty Int'l Underwriters, 572 F.3d
45, 48 (1st Cir. 2009). "A Rule 12(b)(6) motion will be
granted only if, when viewed in this manner, the pleading
shows no set of facts which could entitle plaintiff to
relief." Gooley v. Mobil Oil Corp., 851 F.2d
513, 514 (1st Cir. 1988) (citing Conley v. Gibson,
355 U.S. 41, 45-48 (1957)).
Pickett's amended complaint contains five claims:
negligence, breach of contract, conversion, unjust
enrichment, and vicarious liability. As not all of Mr.
Pickett's claims are against every defendant and each
defendant's role vis-a-vis the mortgage and Mr.
Pickett's status as homeowner differs, the Court will
discuss each of the Defendants and the claims brought against
them in turn, after setting forth the legal elements of each
Rhode Island law, "[t]o maintain a cause of action for
negligence, the plaintiff must establish four elements: (1) a
legally cognizable duty owed by defendant to plaintiff; (2)
breach of that duty J (3) that the conduct proximately caused
the injury; and (4) actual loss or damage." Medeiros
v. Sitrin, 984 A.2d 620, 625 (R.I. 2009).
succeed on a breach of contract claim under Rhode Island law,
a plaintiff must prove that (1) an agreement existed between
the parties, (2) the defendant breached the agreement, and
(3) the breach caused (4) damages to the plaintiff."
Barkan v. Dunkin'Donuts, Inc., 627 F.3d 34, 39
(1st Cir. 2010).
gravamen of an action for conversion lies in the
defendant's taking the plaintiffs personalty without
consent and exercising dominion over it inconsistent with the
plaintiffs right to possession. To maintain an action for
conversion, a plaintiff must establish that she was in
possession of the personalty, or entitled to possession of
the personalty, at the time of conversion." Alex
& Ani, LLC v. Elite Level Consulting, LLC, 31
F.Supp.3d 365, 371 (D.R.I. 2014) (internal citations
omitted). The focus of inquiry is "whether the defendant
has appropriated to his own use ...