834 A.2d 131 (Me. 2003), Han-02-212, Macomber v. MacQuinn-Tweedie

Docket NºNo. Han-02-212.
Citation834 A.2d 131, 2003 ME 121
Opinion JudgeLEVY, J.
Party NameRobert MACOMBER Jr. v. Lisa MacQUINN-TWEEDIE et al.
AttorneyRichard L. O'Meara, Esq. (orally), Murray Plumb & Murray, Portland, for plaintiff., Peter R. Roy, Esq. (orally), Roy Beardsley Williams & Granger, LLC, Ellsworth, for defendants. Richard L. O'Meara, Esq. (orally) Murray Plumb & Murray P O Box 9785 Portland, ME 04104-5085 Attorney for defendants:...
Case DateOctober 14, 2003
CourtSupreme Judicial Court of Maine

Page 131

834 A.2d 131 (Me. 2003)

2003 ME 121

Robert MACOMBER Jr.

v.

Lisa MacQUINN-TWEEDIE et al.

No. Han-02-212.

Supreme Judicial Court of Maine.

October 14, 2003.

Argued: Oct. 7, 2002.

Page 132

Richard L. O'Meara, Esq. (orally), Murray Plumb & Murray, Portland, for plaintiff.

Peter R. Roy, Esq. (orally), Roy Beardsley Williams & Granger, LLC, Ellsworth, for defendants.

Panel: SAUFLEY, C.J., and CLIFFORD, DANA, ALEXANDER, CALKINS, and LEVY, JJ.

LEVY, J.

[¶ 1] Robert Macomber appeals from a summary judgment by the Superior Court (Hancock County, Jabar, J.) determining that an action brought by him and Robert DeSimone to compel arbitration is barred by the doctrine of res judicata. Macomber contends that the Superior Court erred by: (1) reaching the affirmative defense of res judicata where the sole purpose of this action is to compel arbitration, and (2) ruling that his participation as a party-in-interest in an earlier foreclosure proceeding barred his breach of contract claim on the ground of res judicata. Because we conclude that the Superior Court properly reached the issue of res judicata, but erred by determining that the breach of contract claim raised in this action is precluded by the earlier foreclosure judgment, we vacate the judgment.

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I. CASE HISTORY

[¶ 2] The record indicates that in the early 1990s, Robert Macomber, Robert DeSimone, Lisa MacQuinn-Tweedie and her husband James K. Tweedie jointly owned the Park Entrance Motel property in Bar Harbor. The property included approximately eight acres of land, with a three-acre, undeveloped parcel situated on a point overlooking Hulls Cove. This three-acre parcel was called the Point Parcel. Since the early 1990s, the property has been subject to shifting ownership arrangements, contractual disputes, and litigation among the parties. Only a small portion of that history is reflected in this opinion. 1

[¶ 3] In 1996, the parties agreed to settle one phase of the on-going litigation by an agreement dated June 5, 1996, which the parties subsequently revised by an agreement dated August 24, 1996 (collectively, the 1996 agreement). Among other things, they agreed that: (1) Macomber and DeSimone would deed their fifty percent interest in the Park Entrance Motel property to the Tweedies; (2) the Tweedies would pay certain debts obligating Macomber and DeSimone; (3) Macomber and DeSimone would receive an irrevocable option to purchase the Point Parcel; (4) Macomber and DeSimone were given the option to obtain replacement financing in the event that the Tweedies defaulted upon a mortgage to the Union Trust Company and other lenders; (5) the Point Parcel could be partitioned from the remainder of the Park Entrance Motel property subject to conditions imposed by Union Trust Company; and (6) the Tweedies would act in good faith for purposes of meeting the requirements relating to the partition of the Point Parcel. The 1996 agreement also specified that any disputes between Macomber and DeSimone and the Tweedies would be resolved by binding arbitration in accordance with the provisions of the Maine Uniform Arbitration Act, 14 M.R.S.A. §§ 5927-5949 (2003).

[¶ 4] A subsequent 1997 agreement granted an irrevocable option to purchase the Point Parcel to corporations owned by Macomber and DeSimone. As part of the agreement, the Tweedies agreed to exercise their best efforts to comply with the terms and conditions of the Union Trust mortgage.

[¶ 5] In 1998, the parties agreed to participate in arbitration on the claims by Macomber and DeSimone: (1) that the Tweedies had breached the obligations of the 1996 agreement by not making their best efforts to comply with the terms of the Union Trust mortgage, and (2) to allow Macomber and DeSimone to obtain replacement financing to facilitate the partition of the Point Parcel from the remainder of the property. An arbitration proceeding, however, was never held.

[¶ 6] In 1999, the Tweedies defaulted on their mortgage payments to Union Trust. Also, in 1999, the Tweedies signed a contract with David Witham, who attempted to assist Macomber and DeSimone with financing. Pursuant to this 1999 contract, the Tweedies granted Witham a ninety-nine-year lease on the five-acre Park Entrance Motel property and agreed to sell the Point Parcel to Witham. Macomber and DeSimone were not parties to this contract; however, shortly after signing the contract, Witham assigned his interest in this contract to Macomber and DeSimone. The Tweedies then indicated that they would not honor the 1999 contract

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that Witham had assigned to Macomber and DeSimone. Macomber and DeSimone then filed a declaratory judgment action attempting to enforce and determine the validity of the 1999 contract. That action, DeSimone v. Tweedie, CV-99-038, remains pending in Superior Court in Hancock County.

[¶ 7] In December 1999, Union Trust commenced foreclosure proceedings against the Tweedies in the Bar Harbor District Court. Macomber and DeSimone received notice of the proceeding because they had previously filed a lis pendens in the Hancock County Registry of Deeds, and they thereafter actively participated in the foreclosure proceeding as parties-in-interest. During the course of the proceedings, they moved the District Court to: (1) compel Union Trust Company to assign the Park Entrance Motel and the promissory notes to them, and (2) order a bifurcated auction so that the Point Parcel could be carved out of the Park Entrance Motel property and sold separately. Macomber and DeSimone sought this relief, which they characterized as equitable in nature, based upon their claims, as characterized in their subsequent appellate brief, that:

Despite the Tweedies' agreement to act in good faith to permit release of the three-acre parcel from the operation in effect of the Union Trust mortgage, their agreement not to participate or become involved in any negotiations with Thomas Walsh or his various entities and their obligation to use their best efforts to comply with all the terms and conditions of their promissory note and mortgage with the Union Trust Company for the release of the ( [P]oint) property as soon as practicable ..., the Tweedies breached all of those agreements and the mortgage conditions with the Union Trust Company.

They also asserted that "the Tweedies intentionally went into default with Union Trust to force a foreclosure action to attempt to extinguish DeSimone, Macomber [and their corporations'] option on the 3.01-acre [P]oint [P]arcel."

[¶ 8] After a trial, the District Court (Bar Harbor, Staples, J.) granted Union Trust Company a judgment of foreclosure. In its judgment, the court ruled that the option to purchase the Point Parcel did not convey to Macomber and DeSimone an actual interest in the land. Accordingly, the court denied their request that they be assigned the mortgage. The court also denied their motion seeking a bifurcated auction for the Point Parcel:

[T]he court finds no authority to compel the Plaintiff to conduct such a foreclosure sale. At most it could be an option to be exercised by the Plaintiff if the mortgage provisions allow for it. In addition the Court would note that no evidence of fraud was introduced at the hearing nor was there any other evidence warranting such an order sounding in equity. Therefore the motion is denied.

[¶ 9] On appeal, we affirmed the foreclosure judgment, Union Trust v. MacQuinn-Tweedie, 2001 ME 43, 767 A.2d 289, holding that the District Court properly denied the motion to compel assignment of the mortgage because an option to purchase is a contractual right with a mortgagor, not a property right:

Neither at law nor in equity is the holder of an option the functional equivalent of a mortgagee. Unlike a mortgagee, an optionee has no interest in the land. An option " 'is nothing more than an irrevocable and continuing offer to sell and conveys no interest in land to the optionee.' " DiPietro v. Boynton, 628 A.2d 1019, 1023 (Me.1993) (citation omitted). Because the option is a contractual

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right derived from the mortgagor, it does not survive the foreclosure. The optionees' remaining contentions do not warrant discussion.

Id. ¶ 4, 767 A.2d at 290. Among the contentions raised by Macomber and DeSimone that were not expressly addressed in our opinion was the assertion that the District Court erred by denying their request for equitable relief. 2 Following the issuance of our opinion and the expiration of the redemption period, the Park Entrance Motel property was sold in September 2001.

[¶ 10] In March 2001, less than two weeks after our opinion affirming the judgment of foreclosure in Union Trust v. MacQuinn-Tweedie, Macomber and DeSimone sought to revive the arbitration process the parties had discussed in 1998. After the Tweedies refused to arbitrate issues relating to the 1996 agreement, Macomber and DeSimone commenced this action seeking to compel arbitration based on the same alleged breaches of the 1996 agreement by the Tweedies that were raised during the foreclosure trial in the District Court. 3 In preliminary proceedings, the Superior Court set aside a default and denied a motion for attachment and trustee process. The Tweedies then filed a motion to dismiss/motion for summary judgment, asserting that this action was barred by the doctrine of res judicata because the issues in the present action had been asserted and litigated during the course of the 1999-2000 foreclosure proceeding.

[¶ 11] After review of voluminous materials submitted in support of and in opposition to the combined motions for dismissal and summary judgment, and after a hearing, the Superior Court (Hancock County, Jabar, J.) entered a summary judgment for the Tweedies. The court determined that the District Court's consideration of issues relating to the 1996 agreement during the course of the foreclosure...

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