Potenza v. Deutsche Bank — Rhode Island Supreme Court Tightens the “Diligence-and-Reliance” Test for Rule 60(b) Independent Actions Alleging Fraud on the Court

Potenza v. Deutsche Bank — Rhode Island Supreme Court Tightens the “Diligence-and-Reliance” Test for Rule 60(b) Independent Actions Alleging Fraud on the Court

Introduction

The Rhode Island Supreme Court’s decision in Walter M. Potenza v. Deutsche Bank National Trust Co., No. 2023-291-Appeal (July 29, 2025), addresses the difficult path litigants must travel when seeking to reopen a final judgment through an independent action in equity under Rule 60(b). The plaintiffs—borrowers who had already lost a multimillion-dollar breach-of-contract suit—claimed they discovered deposition testimony suggesting that the allonge used to transfer their promissory note was defective and that Deutsche Bank had knowingly misled the trial court. They asked the Superior Court to vacate the 2017 judgment and impose sanctions.

The Supreme Court affirmed the Superior Court’s dismissal on the pleadings, clarifying that:

  • a Rule 60(b) independent action requires both extraordinary diligence by the movant and actual, justifiable reliance on the alleged fraud; and
  • failure to pursue discovery, seek continuances, or otherwise challenge evidence in the underlying case will ordinarily bar equitable relief—even if the plaintiff later uncovers information that might have been helpful.

Summary of the Judgment

Justice Long, writing for a unanimous Court, held that even accepting the borrowers’ factual allegations as true, they could not satisfy the five-part test for an independent action in equity because:

  1. they had admitted in their answer that Deutsche Bank was the note holder;
  2. they failed to use available procedural tools (Rule 56(f) continuance, discovery requests) to obtain deposition evidence before judgment;
  3. their purported “newly discovered” evidence did not show they justifiably relied on Deutsche Bank’s representations; and
  4. any alleged endorsement irregularity (an antedated allonge) did not, on the facts pleaded, render the 2017 judgment “contrary to good conscience.”

Consequently, the Court affirmed the order granting Deutsche Bank’s Rule 12(c) motion for judgment on the pleadings.

Analysis

A. Precedents Cited

The opinion builds on a line of Rhode Island cases that set an exacting standard for post-judgment equitable relief:

  • Sloat v. City of Newport ex rel. Sitrin, 19 A.3d 1217 (R.I. 2011) — reaffirmed the five traditional elements for Rule 60(b) independent actions.
  • Allstate Ins. Co. v. Lombardi, 773 A.2d 864 (R.I. 2001) — earlier articulation of the same five-part test.
  • Forte Brothers, Inc. v. Baalbaki, 569 A.2d 443 (R.I. 1990) — emphasized the “extraordinary” nature of equitable relief and the need for clear injustice.
  • Doe v. Brown Univ., 253 A.3d 389 (R.I. 2021) & Mokwenyei v. Rhode Island Hospital, 198 A.3d 17 (R.I. 2018) — authority for courts to consider undisputed documents when deciding Rule 12 motions.
  • Cote v. Aiello, 148 A.3d 537 (R.I. 2016) — sets out elements of common-law fraud (false representation, intent, justifiable reliance, damages).

By synthesizing these cases, the Court clarifies that both diligence (absence of negligence) and reliance are not merely factors but pre-conditions to reopening a judgment on grounds of fraud on the court.

B. Legal Reasoning

  1. Merger Doctrine on Pleadings. Under Doe and Mokwenyei, the Court treated deposition transcripts and prior judgments as part of the pleadings because the complaint “expressly linked” to them and authenticity was not disputed. That allowed a Rule 12(c) dismissal without converting to summary judgment.
  2. Application of the Five-Element Test.
    • Element 1: Judgment unconscionable? The Court found no inherent inequity; the 2017 summary judgment was procedurally regular.
    • Element 2: Good defense? Even if the allonge were defective, plaintiffs admitted note ownership and never challenged possession or default.
    • Element 3: Fraud preventing defense? Plaintiffs could have discovered the deposition earlier via public records or discovery; therefore, any “prevention” was self-inflicted.
    • Element 4: Absence of negligence? Plaintiffs’ legal team failed to request a continuance or engage in discovery. Negligence bars relief.
    • Element 5: No adequate remedy at law? Plaintiffs had (and waived) the right to appeal the 2017 judgment.
  3. Fraud Elements Missing. For common-law fraud, the Court looked for justifiable reliance. Because plaintiffs never relied on Deutsche Bank’s representations but rather conceded the Bank’s status, reliance was absent.
  4. Policy Choice. The Court underscored finality of judgments and cautioned against using Rule 60(b) as a “second bite at the apple” after strategic errors.

C. Impact of the Decision

The ruling has several forward-looking implications:

  • Higher hurdle for “fraud on the court.” Practitioners must now demonstrate not only the existence of fraudulent conduct but diligent, thwarted attempts to uncover it during the original litigation.
  • Discovery diligence is mandatory. Failure to issue subpoenas, depose witnesses, or seek Rule 56(f) relief will almost certainly foreclose later Rule 60(b) actions.
  • Antedated endorsements. Though the Court reserved full analysis of antedated allonges, the opinion hints that UCC § 3-113 (instruments may be antedated or post-dated) could validate such endorsements. Future litigants will carry a heavy burden to prove that an incorrectly dated allonge invalidates note transfer.
  • Finality affirmed. The decision serves institutional interests in final judgments by limiting collateral challenges four or more years after entry.

Complex Concepts Simplified

  • Allonge: A separate slip of paper attached to a promissory note to provide space for additional endorsements. Under the UCC, an allonge becomes part of the instrument.
  • Rule 60(b) Independent Action: A lawsuit filed after the ordinary one-year deadline for Rule 60(b) motions, asking a court of equity to set aside a judgment obtained by fraud or other extreme circumstances.
  • Judgment on the Pleadings (Rule 12(c)): A procedural device allowing the court to terminate a case where, even accepting all well-pleaded facts as true, the plaintiff has no legal claim.
  • Rule 56(f) Continuance: A party opposing summary judgment can request more time to conduct discovery if it cannot yet present facts essential to its opposition.
  • Justifiable Reliance: For fraud, the plaintiff must show it reasonably relied on the defendant’s misrepresentation or concealment when acting to its detriment.

Conclusion

In Potenza v. Deutsche Bank, the Rhode Island Supreme Court reinforces the extraordinary nature of independent actions in equity and erects a firmer barrier against post-judgment litigation based on alleged discovery of facts that could—and should—have been obtained earlier. By tying equitable relief to both absence of negligence and actual reliance, the Court heightens litigants’ obligation to exercise diligence during the initial proceedings and underscores the judiciary’s commitment to finality. Future borrowers, mortgagors, and litigants generally must treat discovery obligations seriously; failure to do so will likely foreclose any later attempt to revisit an unfavorable judgment under the banner of Rule 60(b).

Case Details

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