STATE OF RHODE ISI,AI{D AND PROVIDENCE PI,ANTATIONS PROVIDENCE, SUPERIOR COURT

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ROCM 506 SUPERIOR COTJRT _ 250 BEMFIT STREET PROVIDENCE, RHODE, ISI,AND 02903

COURT REPORTERS

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F.EBRUARY 6
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10,

2011.

TO:

SALLY ST-

ONGE

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PAYABLE: Wendy J. Ol-ivo Courl ReporLer

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Super:ior Court, Rm. 506 250 Benefit Street P::oviderrce, R. I. 02903

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Bi\I{K, PC-09-5766, heard on Nov 23, HonorabJ.e Stephen J. EORTUNATO.

For a transo:ipt-

in

MICHAEL DTANA

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Vf,J\SHINGTON I4IJTUAI, before Thre

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TCTTAL AYJOUM DIJIi

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APPROVED:

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STATE OF RHODE ISI,AND AND PROVIDENCE PLA}ffATIONS
PROVTDLTNCE,

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SUPERIOR COIJRT

MICI.IAEL DTANA

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vs.

CASE

NO: PC-09-6765

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W:\SHIN6I'ON MUTUAI BANK

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I.IEARD BEEARE

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HONORABLE

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MR. JTJSTICE STEPIIEN
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FCIRTUI{ATO

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NOVBMBEB,

23RD, 20L0

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APPEARANCES:
GEORGE BABCOCK, EiSQ. .TOHN P.RECOBB, ESQ.

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FOR TI]E PLATNTIFF

FDR TITE DEruDIDAIVI

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WENDY

J.

OLIVO

COURT REFOR1NR

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c E R r.J F J c A_r r o
I, J. Olivo,

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Wendy

hereby

certify that the
a true
and

succeeding pages 1 through

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jrrc.l.usj-ve/ are

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accurate transcript of my stenographic notes.

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NO\EI4BER 23RD, 2010

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(A. M. SESSTON)
THE

gtERK: !-irst matter before the court is on page

four,-Michael- Diana versus Washingl:orr Mutual Bank,
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PC*O9-6766.

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riglrt. Gentlemen, just by way of background, and as r said to other attorney$ on this cal-endar, rf ve read Lhe papers so r don't need extended argr-rment, jusL irighli,ght as you see fit. But where is the subject property new -- I mearr, what is the status of the house, who has it and where .i.s it, especially in
THE COURT:

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r:egard

to the plaintrffs?

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for the defendant. It's currently. it j--s -- we're not, property is not being
MR. PRECOBIS: .Tolur Precobb,

transferred.
l,lR. RABCOCK:

If I

mav, Judge, the properLy was

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foreclosed and wj.thout getting into whet^her

it

was

appropriately matter

--

my

clients are in the house

and they're

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paying use and occupancy on a nrorrthl-y basis

unti]

the

is

resolved.

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THE COUIRT: Qkay. l,(lR. PRECOBB: So

if

necessary,

if the Court were to

have

it -- to

j-ssue an order regardi-ng foreclosure/ there

is the possiJrility that the foreclosure could be urrdone. So it has not been sold to a third party, if that is

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what, your Honor

--

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it is a concel:n Lo me for thi"s reason, and tFrat- is because of the equita_bl_e principal of that which should have been done, is presumed to have been done. But I think 1:hat' s l-i_ke most equitabl.e
TIIE COURT: V,jel1,

principal-s, very contextual i n terms of
competing equities house,' Lhe

what_

the

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aref if they werc

l-ong out

of the
have been

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fact that there docs not appear to

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appropriate corq)l__iance; does not appear to have been
app:r:opriate conpliar"rce with the Rhode Isl_and statute

pertaining to written transfers, not rrecessarity recording' but wrj.tten transfers and assi-gnments. cn the other hand, 1.hey'::e stil-l in t-he house.

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for that, your Honor, is because we nrade 'L;he decision at this point in tirne
MR. PRECOBB; And the reason

sj.nce th:i-s case was pending, we di.dn't want l-o move these

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people oul

of their
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home

if

sornething,

if this Court, .i-f

a Court were
forecl-osure.
MR.

decide that- there was a problem with the

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ISABCOCK:

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If I

may, Mr. Precohb had beerr

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lot of times L,hat did:r't happen, I can't say tha't- in this case. THE COIJRT: WeII, that's good t-o treo.r. Thatrs what
l:horoughly professional throughout {:his, a

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I'm inclined t-o say/ and that i.s that there does not seem to be an appropriate transfer from the FDIC to Jp.Morgan

Chase. Now, in no way am f saying that FDIC doesn't
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have

a role or Lhat sta'l-e courl-s come irr and does regard the

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t do think that the cases of IrDIC'v McFarland, aE 243 F.3d 876/ as well as US V}fi-rnbe}:L!-'oods, that j-sKIMBELL, at 440US '715, US Supreme Court case decided in 1979, Lhey seem to stand for the propo-rition that state ac't-s that have
supremacy clause and so

on, but

reasonable and conmonsensical proviei.on.s reqarding

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wri[ten transfers state
requi-remenL

and assiglrments, are,not

the klnd of

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that nullifies the federal intervention

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of

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in matters such as this one. I don't know, counsel, if you warrt to chal-Ienge that or -MR. PRECQBE: Yes, your Honor, in the ca$e tlrat I cited in my memorandr:ttt, the Soni decisj.on, -S O N I, I believe, I believe that the Court in Soni drd exp.l.ain and di,scuss the reason for the justification for there not
trDIC

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being a requirement that there being a particnlar
assigrurrenl, woufd corrqr-ly

with state

J.aw, and

in that case'

Lhe Court poi.nted

to the fact that under the FDIC, the
pub.Lic

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regu.laLions arrd

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policy reasons and to a]low for the F'llIC to have a smoo't-h and proper transition of

for

aEsets

that the FDIC shoul"d be alrle t-o do what it was cloing. We're tal-king abou'b, thev're deal.ing with closing
insti.tutions which have thousands and thousands of aSSeLS, and in order to have a Smooth transition and to..

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avoid there
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to be issues with these institutions being closed, that they wor:Id be aLlowed Lo and that the federal stal-ute provided. their rrghl to do tlrat. And I think that that.'s the arg'ument to be nnde, Irm not -- of
course/ I'm not negatirrg Rhode Island law; however, under

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I believe that under presunption and as discussed in Soni -TIIE COURT: Althouqh, I thj,nk Sol* is disl:inguj.shable l:ecause in Soni it seems as though the statute said that there had to be some sort of consent for a receivershrip, for a receivership and the Federal. Law said no, no consent :lequi-red. for FDIC and so there was a direct conflict. Whereas -i-n the instant matter, it's lust the simple use of a docr:ment. Now I know that the, as you just saj.d, counselor, the FDIC j-s dealing with hrrndreds orl even thousands of thcse homes, bul, the probl.em i-s, and I guess it's, at feast it's been reported i.n Lhe mass media, when all these houses are put into Iittle bundles and little packages, j-ndj-vidual home owners who do have property rights at sta.ke here get lost
LhE;se

circumstances/

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j-n the shuff.l"e

or

some'Lj-r^nes

we cou1cj say they geL crushed

in

tt-re shuffl-e and so

iL is for that reason'

and

I

do not

think that Soni is persuasive, but- rather the two cases bhal- I citecl t-h.1t thre clefendanl-'s notion is denied.
MR. PRECOBB: Thank YOU, Judge.
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THE COTJRT: SulcnLit an
rt'IIE REP'RTER;

order, please.
have your nar*E

courd

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for

the

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record?
MR. MBCOCK: Attorney Geo::ge Babcock

for

the

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plaintiffs.
MR. PRECOBB; Ancr .lohn precobb
(HEARING ADIOTJRNED)

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for the defense.

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