United States Court of Appeals: For The First Circuit

United States Court of Appeals
For the First Circuit

No. 12-1526
RUDOLF F. FRYZEL AND RUTH E. FRYZEL,
Plaintiffs, Appellees,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., ET AL.,
Defendants, Appellants.
No. 12-1563
IN RE: CERTAIN DEFENDANTS TO THE IN RE:
MORTGAGE FORECLOSURE CASES, ET AL.,
Petitioners.
No. 12-1720
THOMAS D. GAMMINO,
Plaintiff, Appellee,
v.
No. 12-1721
JULIO FONSECA, ET AL.,
v.
No. 12-1768
FRITZ BARIONNETTE, ET AL.,
v.
No. 12-1839
COLLETTE P. FITZPATRICK,
Plaintiff, Appellee,
v.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. John J. McConnell, Jr., U.S. District Judge]
Before
Howard, Circuit Judge,
Souter,* Associate Justice,
and Lipez, Circuit Judge.
Hon. David H. Souter, Associate Justice (Ret.) of the

Supreme Court of the United States, sitting by designation.
Maura K. McKelvey, with whom Richard E. Brianksy and Amy B.

Hackett were on brief, for appellants.
Mark Ladov, with whom Matthew Menendez, Steven Fischbach, John
Rao, and Geoff Walsh were on brief, for amici curiae Rhode Island
Legal Services, Inc., Brennan Center for Justice at New York
University School of Law, National Consumer Law Center, Inc.,
Direct Action for Rights and Equality, and Housing Network of Rhode
Island.
Corey J. Allard, with whom George Babcock was on brief, for
appellees.
June 14, 2013
SOUTER, Associate Justice. The plaintiff-appellees in

this consolidated interlocutory appeal are defaulted mortgagors of
Rhode Island real estate.
They have brought suit to prevent
foreclosure or eviction, on the shared ground that ostensible

assignments of their mortgagees legal titles are invalid, leaving
the assignees without the right to foreclose.
assigning
System,
mortgagee
Inc.
was
(MERS).1
the
Mortgage
The
In most cases, the
Electronic
Registration
defendant-appellants
are
the
corresponding mortgagees, their agents or assignees (mortgagees),

who apparently hold Rhode Island mortgagees legal titles and
assert the right to foreclose for default on mortgage terms.
By
appeal and mandamus petition, they claim error in the district

courts failure to provide notice and hearing before issuing
successive orders imposing a stay in the nature of a preliminary
injunction against foreclosure and possessory proceedings, and in
its failure to set limits of time and cost when referring the
mortgagors cases challenging foreclosure to a Special Master for
mandatory mediation.
hearing
with
We remand with instructions to hold a prompt
reasonable
notice
on
the
question
whether
the
injunction should be continued, in belated compliance with Federal
See Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282

(1st Cir. 2013), for a description of MERSs structure and
function. There is no need to go into such background in detail
here, for this appeal is about judicial procedure, not about the
substantive rights of mortgage parties or their assignees, as
contested in these consolidated cases.
-4-
Rule of Civil Procedure 65(a)(1), and to establish specific limits

of time and expense if the reference for mediation is to remain in
effect.
I
Although at the time of briefing there were nearly 700
cases in the district court subject to the challenged orders (not
all of them subject to this appeal), they began in the state courts
with a trickle, from which some of them were removed to federal
court based on diversity jurisdiction.
In 2011, a magistrate
recommended dismissal in two of those cases on the ground that the

mortgagors had no standing to challenge the assignments of the
original mortgagees interests, see J.A. 226-27, 264-65, but the
district court has not to this day acted on the recommendations,2
and instead has established a Foreclosure Docket for managing the
cases in what has become a deluge of those removed to the district
court or originally brought there in the aftermath of the courts
orders staying the foreclosures and appointing the Special Master
to mediate the claims.
The orders imposing a stay did not in terms forbid
non-judicial foreclosure by mortgagees acting under a power of sale
mortgage contract as authorized by Rhode Island law, but when one
One of these cases was subsequently dismissed for reasons not

pertinent here. The other remains in mediation. We note that the
issue raised is not about a mortgagors general standing to
challenge foreclosure, but about standing to challenge a
mortgagees assignment of its interest.
-5-
of them took that action in a case on the docket, the court issued
an order in that case providing that the stay prevents defendants
from foreclosing on properties that are subject of a pending
complaint in the In Re: Mortgage Foreclosure Master Docket.
367.
J.A.
When a new docket-wide order was then issued continuing the
stay in effect in all cases, it was clear from the sequence of

the
orders
that
the
stay
was
meant
to
bar
power
of
sale
foreclosures otherwise requiring no prior judicial approval, or any

other foreclosure or possessory action for that matter.
This
consolidated appeal by some of the defendant mortgagees followed,

objecting to that order and to the failure of the mandatory
mediation order to set limits of time and expense.
II
The first contested issue here is over the jurisdiction
of this court to review what the district court calls the stay
order, although on the face of the record jurisdiction seems
obvious.
28 U.S.C. 1292(a)(1) provides a court of appeals with
authority to entertain appeals from interlocutory orders of the

district courts . . . granting . . . or refusing to dissolve . . .
injunctions, and the sequence of orders already quoted shows that
the stay prevents [mortgagees] from foreclosing.
In attempting to support their contrary position that the
stay is not an injunction, the mortgagors rely repeatedly on the
district courts choice of a word in calling the order a stay,
-6-
which
they
describe
as
one
that
merely
halts
and
delays
foreclosure or eviction by process outside this litigation.

Appellees Br. 4.
But these are not substantial arguments.
The
nature of an order is the product of its operative terms and

effect, not its vocabulary and label.
See Gulfstream Aerospace
Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88 (1988); Manchester

Knitted Fashions, Inc. v. Amalgamated Cotton Garment & Allied
Indus. Fund, 967 F.2d 688, 690 (1st Cir. 1992).
As against a stay,
which is simply related to court procedures, an injunction, by

whatever name, directs or forbids a party to act, with serious
consequences, enforceable by the contempt power, and it grants some
or all of the relief requested by the favored party.
Bogosian v.
Woloohojian Realty Corp., 923 F.2d 898, 901, 903-04 (1st Cir.
1991). The order here can only be read as forbidding mortgagees to
foreclose even in the exercise of a statutorily sanctioned power of
sale that requires no authorizing court order.
To enforce its ban
on mortgagees obtaining a remedy agreed upon (or provided by state

law) for the purpose of securing mortgage indebtedness, the court
has explicitly threatened sanctions for violations, and in halting
foreclosure for whatever the duration of the mediation process may
turn out to be, the order grants some of what the plaintiff
mortgagors seek.
Its character as an injunction is unmistakable,
and obviously it is no answer to say that it merely halts or delays

the course of action a mortgagee means to take; this is the sort of
-7-
thing that a preliminary injunction under Fed. R. Civ. P. 65(a)

does.
The only remaining question is timeliness of the appeal
under Federal Rule of Appellate Procedure 4(a), requiring a notice
of appeal to be filed within 30 days of an order such as this.
Although the court issued two generally applicable stay orders
whose 30 day appeal periods expired long before the mortgagees
notice of appeal was filed, the notice was filed within the
allowable period after issuance of the new general order that
followed the definition of stay to mean injunction.
From the
issuance of the new general order in which stay clearly meant

preliminary injunction, then, the appeal of the injunction was
timely, and that is not denied.
As for our jurisdiction to consider an interlocutory
appeal to review the mortgagees objection to the want of time and
expense limits on the reference for mandatory mediation, the briefs
have addressed the applicability of the collateral order doctrine
under Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949),
as
well
as
jurisdiction
consolidated here.
however, is
mediation
the
order,
conferred
by
the
mandamus
petition
The more straightforward basis for review,
close
concordance
which
follows
places
from
of
the
injunction
latter
authority
within
to
and
the
pendent
jurisdiction
that
injunction.
As will be seen when we reach the issues of this
-8-
the
the
review
the
appeal, the district court has postponed consideration of the

merits of the mortgagees suits while mediation continues, with the
purpose
of
channeling
the
parties
energies
toward
reaching
settlements of the underlying default claims, an object that would

be
defeated
foreclosures
if
and
the
thus
mortgagees
pretermit
were
the
free
to
proceed
mediation.
Thus,
with
the
injunction has so far had no point except to keep mediation alive

while allegedly defaulting borrowers remain in their mortgaged
houses.
Hence, the subjects of the two orders may fairly be
described as inextricably intertwined, see Limone v. Condon, 372

F.3d
39,
50-51
(1st
Cir.
2004),
with
the
consequence
that
jurisdiction over the one interlocutory order extends to the other

as well, under the pendency doctrine.
III
With this analysis of jurisdiction as a preface, the
merits of the appeal can be resolved with economy.
On each issue
the standard of review is abuse of discretion, Peoples Fed. Sav.

Bank
v.
Peoples
Un.
Bank,
672
F.3d
1,
(1st
Cir.
2012)
(preliminary injunction); In re Atl. Pipe Corp., 304 F.3d 135, 145

(1st Cir. 2002) (mediation), with error of law constituting abuse.
Each order suffers from error.
As for the injunction, Fed. R. Civ. P. 65(a)(1) provides
that a preliminary injunction may be imposed only on notice to the
adverse party, a requirement that has been held to include a
-9-
hearing followed by findings that the party to be favored has a

substantial likelihood of success in the pending action, would
otherwise
suffer
irreparable
harm
and
can
claim
the
greater
hardship in the absence of an order, which will not disserve the

public interest if imposed.
See TEC Engg Corp. v. Budget Molders
Supply, Inc., 82 F.3d 542, 545 (1st Cir. 1996).
There is no claim
that formal notice was ever given here, and although there is no
dispute that mortgagors will suffer greatly from any foreclosure
and dispossession, that conclusion says nothing about the other
necessary conditions, especially the critical requirement of the
mortgagors likelihood of success in challenging foreclosure.
See
Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 112, 115
(1st Cir. 2006).
These conditions were ignored and must be
addressed promptly, along with any defenses to the injunction that

the mortgagees may raise.
In the course of dealing with these
matters, the court will reach the subject of the magistrates

year-old recommendation to dismiss the specific case for the
mortgagors lack of standing to object to the assignment to the
named foreclosing party.
The mortgagors attempts to excuse these lapses have no
merit.
While they say that the mortgagees have had opportunities
for hearings and were in fact heard at every mediation session,

they fail to point to any indication from the court that the
Special Master was authorized to consider the propriety of the
-10-
global injunction or, in particular, to address the mortgagors

standing to object to assignments and general probability of
success in attempting to block foreclosures by the assignees.
Indeed, the district courts refusal to address the mortgagors
jurisdictional standing, despite the magistrates conclusion that
they
have
none,
is
candidly
shown
in
the
courts
instruction to the Special Master to avoid the issue.
express
In an order
dated January 7, 2013, the judge referred to a class of potentially

dispositive matters open to the masters consideration, being
those that relate to a specific case, based on
case-specific facts that are not shared with
the collective docket . . . . [T]he parties
should note that they all are fact specific to
a given case and do not raise claims common to
the complaints . . . . The Court will not
grant relief from the stay at this time for
any legal issues related to the common claims
made in any Complaint, raised in any common
defense, or those intertwined with the
global issues of standing, jurisdiction and
the like. The narrow exception from the stay
is not intended to provide a back door
mechanism for litigating the substantive
claims or defenses.
Order, In re: Mortgage Foreclosure Cases, No. 11-mc-88-M, at 1-2
(D. R.I. Jan. 7, 2013).
The terms of this order confirm the
mortgagees claims that generally applicable findings (including

the mortgagors class-wide probability of success) have not been
made even implicitly (let alone expressly, as required by Fed. R.
Civ. P. 52(a)(2)), and they provide beyond any question that the
-11-
mortgagees may not presently address the subjects of required Rule

65(a)(1) findings on grounds common to all parties.
Nor is there any substance to the mortgagors suggestion
that
the
supporting
Rule
documents
the
65
failure
is
injunction;
we
supporting
success, for example.
the
cured
have
by
not
injunction
record
documentation
been directed
requirement
of
to
any
probable
Finally, it is enough to say that there is
likewise nothing to the mortgagors claim that the openness of

the injunction and mediation plan is any answer to Rule 65.
The
issuance of an unauthorized injunction does not validate it.

In sum, the imposition of the injunction was error for
failing to satisfy Rule 65.
As a consequence, the terms of the
mandatory mediation, which the injunction protects from mootness,

need not be addressed in detail except to note its failure to
conform to the standard of reasonable trial court discretion as
explained in In re Atl. Pipe Corp., 304 F.3d 135.
That case
resembled this one in its complexity, which was the premise for
holding it appropriate to provide prospective limits on the
period within which mediation must be completed and on the costs to
which the parties may be subjected, id. at 147.
Conversely, this
court
courts
rejected
the
sufficiency
of
the
trial
general
oversight as a safeguard against unreasonable delay and expense

that might be imposed before moving on to the customary judicial
process in the event that the mediation failed.
-12-
The omission of
these safeguards from the successive mediation orders here was

error.
Although it would be open to this court simply to vacate
the injunction and mediation orders, we fear that the practical
effect of requiring such immediate action on a docket currently the
size of this one would be chaos.
If the issues resolved here had
been addressed by the district court when the volume of cases was
at the trickle stage, correction of the errors would have been
fairly simple. As the docket now stands, however, nearly 150 cases
are consolidated in this appeal, and we are told that at the time
of briefing another 550 or so were governed by the orders reviewed
here and subject to being affected by this courts action and by
the district courts ensuing proceedings on remand.
We therefore
think the prudent course is to tolerate the status quo long enough
to give the parties time to plan for contingencies.
Accordingly,
we remand with instructions to take steps expeditiously to correct

the errors.
The
earliest
district
reasonable
court
date
to
will
schedule
determine
hearing
whether
the
at
the
existing
injunction against foreclosure and possessory action should be

continued.
The
burden
of
demonstrating
entitlement
to
any
injunctive relief will rest on the mortgagors as it would have if

a timely hearing had been held in compliance with Rule 65, and the
district courts conclusions must be stated as Rule 52 requires.
-13-
Although this court has not held that a jurisdictional issue must
always be resolved before issuing a mediation order, see In re Atl.
Pipe Corp., 304 F.3d at 145, the jurisdictional standing objection
raised by the mortgagees here is (as we have said) necessarily
implicated in the mortgagors burden to show probable success as a
condition of continuing the injunction.
If we are correct in our
understanding that the same issue is the subject of the magistrate

judges recommended disposition in the specific case remaining
before the district court, that recommendation should be acted upon
no later than the order continuing or lifting the injunction.
If the district court determines that the currently
consolidated cases, or some of them, are to remain on the docket,
a second hearing should then be scheduled promptly to decide
whether the mediation order should be continued and, if so, what
time and cost limits should be set and what the allocation formula
should be.
Given the extent of the current docket, it will
doubtless be difficult to confine time and cost with assurance, but

at the very least such limits as the court does set (though not
immune to revision, see ibid.), will require formal, periodic
reconsideration if any further mediation is not concluded within
them.
The amicus brief has called our attention to a Special
Masters estimate that all current cases will have been treated
with to some degree by Autumn of 2013, an estimate that may be
considered in presently setting a time limit, though of course we
-14-
do not mean to rule out augmenting the Special Masters personnel

and acting faster if that can reasonably be done at this point.
The consolidated cases under appeal are remanded for
further proceedings consistent with this opinion. The parties will
bear their own respective costs.
It is so ordered.
-15-

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United States Court of Appeals

For the First Circuit

Hon. David H. Souter, Associate Justice (Ret.) of the

Maura K. McKelvey, with whom Richard E. Brianksy and Amy B.

June 14, 2013

SOUTER, Associate Justice. The plaintiff-appellees in

They have brought suit to prevent

foreclosure or eviction, on the shared ground that ostensible

In most cases, the

corresponding mortgagees, their agents or assignees (mortgagees),

appeal and mandamus petition, they claim error in the district

We remand with instructions to hold a prompt

injunction should be continued, in belated compliance with Federal

See Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282

Rule of Civil Procedure 65(a)(1), and to establish specific limits

recommended dismissal in two of those cases on the ground that the

One of these cases was subsequently dismissed for reasons not

When a new docket-wide order was then issued continuing the

stay in effect in all cases, it was clear from the sequence of

foreclosures otherwise requiring no prior judicial approval, or any

consolidated appeal by some of the defendant mortgagees followed,

28 U.S.C. 1292(a)(1) provides a court of appeals with

authority to entertain appeals from interlocutory orders of the

foreclosure or eviction by process outside this litigation.

But these are not substantial arguments.

nature of an order is the product of its operative terms and

See Gulfstream Aerospace

Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88 (1988); Manchester

which is simply related to court procedures, an injunction, by

To enforce its ban

on mortgagees obtaining a remedy agreed upon (or provided by state

Its character as an injunction is unmistakable,

and obviously it is no answer to say that it merely halts or delays

thing that a preliminary injunction under Fed. R. Civ. P. 65(a)

issuance of the new general order in which stay clearly meant

The more straightforward basis for review,

As will be seen when we reach the issues of this

appeal, the district court has postponed consideration of the

settlements of the underlying default claims, an object that would

injunction has so far had no point except to keep mediation alive

Hence, the subjects of the two orders may fairly be

described as inextricably intertwined, see Limone v. Condon, 372

jurisdiction over the one interlocutory order extends to the other

the standard of review is abuse of discretion, Peoples Fed. Sav.

(preliminary injunction); In re Atl. Pipe Corp., 304 F.3d 135, 145

hearing followed by findings that the party to be favored has a

hardship in the absence of an order, which will not disserve the

See TEC Engg Corp. v. Budget Molders

Supply, Inc., 82 F.3d 542, 545 (1st Cir. 1996).

These conditions were ignored and must be

addressed promptly, along with any defenses to the injunction that

In the course of dealing with these

matters, the court will reach the subject of the magistrates

While they say that the mortgagees have had opportunities

for hearings and were in fact heard at every mediation session,

global injunction or, in particular, to address the mortgagors

instruction to the Special Master to avoid the issue.

dated January 7, 2013, the judge referred to a class of potentially