Deutsche Bank's courtroom win highlights why commercial mortgage pros must keep documentation airtight and act fast when disputes arise. Here's how the case unfolded
A recent Rhode Island Supreme Court ruling has put the spotlight on how documentation can make or break a commercial mortgage dispute involving a securitized loan.
In this case, Walter M. Potenza and Carmela Natale took out a $883,750 commercial loan in 2005 to finance a property on Atwells Avenue in Providence. The closing was handled by attorney Karen Medeiros at Residential Title & Escrow Services, Inc., after Equity One, Inc. sent over the loan package. The mortgage was executed to Mortgage Electronic Registration Systems, Inc. as nominee for Equity One.
By 2011, the loan had landed with Deutsche Bank National Trust Company, acting as trustee for a commercial mortgage-backed securities trust. Deutsche Bank sued Potenza and Natale, alleging they defaulted on the promissory note and a 2007 loan modification agreement. Deutsche Bank said it held the note, supported by an allonge—a slip of paper sometimes attached to a negotiable instrument to receive further endorsements. Potenza and Natale admitted in their answer that Deutsche Bank was the holder of the note, but denied defaulting on payments.
Deutsche Bank also filed suit against Residential Title in September 2011 and deposed Medeiros in October 2014. Potenza and Natale weren’t notified of the deposition, since they weren’t parties to that lawsuit. Medeiros testified that the allonge was transmitted to Residential Title as part of the closing package, was not signed by the borrowers, and would typically be handled by the post-closing department. As of October 9, 2014, counsel for Deutsche Bank was aware the allonge was transmitted to Residential Title before the closing, bearing the name Edmond L. Fernand.
In November 2016, Deutsche Bank moved for summary judgment, submitting the note, allonge, and loan modification agreement as evidence. The court granted the motion, entering judgment for $1,662,837.12 on April 10, 2017. Potenza and Natale did not appeal.
On September 1, 2021, Potenza and Natale obtained the Medeiros deposition transcript and filed an independent action in equity under Rule 60(b), alleging Deutsche Bank had committed fraud on the court by falsely claiming to be the holder of the note. They argued the allonge was antedated and could not have transferred the note to Deutsche Bank. They asked the court to vacate the judgment, enjoin Deutsche Bank from reforming the mortgage in a separate action, and award punitive damages and attorneys’ fees.
Deutsche Bank responded with a motion for judgment on the pleadings, arguing that the complaint didn’t allege facts that would entitle the plaintiffs to relief. The Superior Court agreed, finding the complaint relied solely on Medeiros’s deposition, which did not suggest fraudulent behavior by Deutsche Bank. The court also found that the plaintiffs’ failure to present this evidence earlier was due to their attorneys’ negligence.
Potenza and Natale appealed, arguing the trial justice evaluated evidence rather than applying the correct standard for judgment on the pleadings. The Rhode Island Supreme Court, in its July 29, 2025 decision, found that even if the plaintiffs’ allegations were true, they couldn’t meet the requirements for relief under Rule 60(b). The justices noted Potenza and Natale admitted Deutsche Bank was the note holder, didn’t seek a continuance to gather more evidence, and didn’t appeal the original judgment. The court found no evidence Deutsche Bank withheld information or prevented the plaintiffs from defending themselves.
The Supreme Court affirmed the judgment in favor of Deutsche Bank and sent the case back to the Superior Court. For mortgage professionals, especially those in commercial lending and securitization, this case is a clear reminder: keep your documentation tight and act quickly if issues arise. When it comes to commercial mortgages, the paperwork—and timing—can decide who wins in court.
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