Bank of Am., N.A. v. Greenleaf

• Decision Date: 03 July 2014
• Docket Number: Docket No. Cum–13–536.
• Citation: 2014 ME 89,96 A.3d 700
• Parties: BANK OF AMERICA, N.A. v. Scott A. GREENLEAF et al.
• Court: Maine Supreme Court

96 A.3d 700

2014 ME 89

BANK OF AMERICA, N.A.

v.Scott A. GREENLEAF et al.

Docket No. Cum–13–536.

Supreme Judicial Court of Maine.

Argued: May 14, 2014.

Decided: July 3, 2014.

John D. Clifford IV, Esq., Clifford & Golden, PA, Lisbon Falls, and Thomas A. Cox, Esq. (orally), Portland, for appellant Scott Greenleaf.

John Doonan, Esq., and Jenai Cormier, Esq., Doonan, Graves & Longoria, Beverly, MA, and Phoebe N. Coddington, Esq. (orally), Winston & Strawn LLP, Charlotte, NC, for appellee Bank of America, N.A.

L. Scott Gould, Esq., Cape Elizabeth, J.L. Pottenger, Jr., Esq., Jerome N. Frank, Legal Services Organization, New Haven, CT, and Geoff Walsh, Esq., National Consumer Law Center, Boston, MA, for amici curiae Jerome N. Frank Legal Services Organization and National Consumer Law Center.

Panel: ALEXANDER, SILVER, MEAD, GORMAN, and JABAR, JJ.

GORMAN, J.

[¶ 1] Scott A. Greenleaf appeals from a judgment of foreclosure entered in the District Court (Bridgton, Mulhern, J.) in favor of Bank of America, N.A. (the Bank).¹ Greenleaf challenges the Bank's standing to foreclose, the court's finding that the Bank established each fact necessary to obtain a foreclosure judgment, and the court's admission of certain evidence at trial. Greenleaf also contends that the court erred by imposing an inadequate sanction on the Bank for violating the rules of summary judgment practice. We agree that the Bank lacks standing to seek foreclosure of the property, and we vacate the judgment.

I. BACKGROUND

[¶ 2] In November of 2006, Scott A. Greenleaf executed a promissory note in the amount of $385,000 to Residential Mortgage Services, Inc. (RMS). On the same date, Scott and Kristina Greenleaf ² signed a mortgage on property in Casco securing that debt. The mortgage listed RMS as the “lender” of the $385,000 and Mortgage Electronic Registration Systems, Inc. (MERS) as the “nominee” for the lender.

[¶ 3] In August of 2011, the Bank instituted foreclosure proceedings against the Greenleafs in the District Court.³See14 M.R.S. §§ 6321– 6325 (2013). The Bank filed a motion for summary judgment in July of 2012, which the court ( Powers, J.) dismissed as untimely. On Greenleaf's motion, the court also sanctioned the Bank for failing to comply with the filing requirements of M.R. Civ. P. 56(h)(1). More specifically, the court determined that the Bank's statements of material fact were “jumbles [of] multiple sentences” rather than a single concise fact per statement, and that many of the Bank's purported statements of fact inappropriately contained argument or analysis. In addition, the court determined that Attorney John Doonan had inappropriately sought to create a foundation for the admission of the Bank's business records by submitting an affidavit regarding his knowledge of the Bank's recordkeeping practices, in which Attorney Doonan also asserted facts about which he lacked any personal knowledge. SeeM.R. Civ. P. 56(e). The court imposed a sanction of $625 (an amount equal to half of Attorney Doonan's flat fee to commence the action, commence service of process, and move for a summary judgment) to be paid by Attorney Doonan personally. ⁴ The court denied Greenleaf's additional request for attorney fees and costs and his motion for reconsideration as to the amount of the sanction.

[¶ 4] At a trial held July 23, 2013, the court admitted the following exhibits: the original note; the 2006 mortgage; a recorded document purporting to demonstrate the assignment of Greenleaf's mortgage and note from MERS to BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing, LP (BAC); a recorded certification that BAC merged with the Bank effective July 1, 2011; a copy of the notice of default and the right to cure; a printout purporting to show Greenleaf's payment history and amounts owed on the note; and an affidavit verifying that Greenleaf is not in the military. The only witness who testified was Heather Pollock, the Bank's “litigation liaison.”

[¶ 5] By decision dated September 6, 2013, the court entered a judgment of foreclosure in favor of the Bank in the amount of $551,414.36 plus $8969.43 in fees and costs. Greenleaf timely appealed.

II. DISCUSSION

A. Standing

[¶ 6] We first address Greenleaf's threshold argument that the Bank lacked standing to seek foreclosure of the property. We review the facts underlying a determination of standing for clear error, Bissias v. Koulovatos, 2000 ME 189, ¶ 6, 761 A.2d 47, and we review the court's ultimate determination of standing de novo as an issue of law, Mortg. Elec. Registration Sys., Inc. v. Saunders, 2010 ME 79, ¶ 7, 2 A.3d 289.

[¶ 7] As a prudential matter, “we may limit access to the courts to those best suited to assert a particular claim.” Id. ¶ 14 (quotation marks omitted). “[S]tanding” defines those best-suited parties; it refers to the minimum interest or injury suffered that is likely to be redressed by judicial relief. Id. Every plaintiff seeking to file a lawsuit in the courts must establish its standing to sue, no matter the causes of action asserted. Id. Just what particular interest or injury is required for standing purposes and the source of that requirement—whether statutory- or common law-based—varies based on the type of claims being alleged. JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 8, 10 A.3d 718.

[¶ 8] In Maine, foreclosure is a creature of statute, see14 M.R.S. §§ 6101–6325 (2013), and thus, standing to foreclose is informed by various statutory provisions. The very same statutory provisions that govern standing also provide a basis for evaluating a foreclosure claim on its merits. Given this overlap in source, we have not always clearly distinguished between issues of standing and issues of proof. We do so today.

[¶ 9] Title 14 M.R.S. § 6321,⁵ states that “the mortgagee or any person claiming under the mortgagee” may seek foreclosure of mortgaged property. See Bank of Am., N.A. v. Cloutier, 2013 ME 17, ¶ 15, 61 A.3d 1242. “[A] mortgagee is a party that is entitled to enforce the debt obligation that is secured by a mortgage.” Saunders, 2010 ME 79, ¶ 11, 2 A.3d 289 (emphasis omitted). Because foreclosure regards two documents—a promissory note and a mortgage securing that note—standing to foreclose involves the plaintiff's interest in both the note and the mortgage. See, e.g., JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 9, 10 A.3d 718 (stating that the plaintiff bank's failure to establish its ownership of the mortgage renders it “vulnerable to a motion ... challenging [its] ability to foreclose” as a matter of standing); Saunders, 2010 ME 79, ¶ 15, 2 A.3d 289 (“Without possession of or any interest in the note, [a party] lack[s] standing to institute foreclosure proceedings and [may] not invoke the jurisdiction of our trial courts.”).

1. The Note

[¶ 10] Because a mortgage note is a negotiable instrument, 11 M.R.S. § 3–1104(1) (2013), the enforceability of the plaintiffs interest in the note is governed by Maine's Uniform Commercial Code (U.C.C.), 11 M.R.S. § 3–1301 (2011).⁶Wells Fargo Bank, N.A. v. Burek, 2013 ME 87, ¶ 18, 81 A.3d 330; see11 M.R.S. § 1–1101(1) (2013). Section 3–1301 permits a party to enforce a note if it is the “holder” of the note, that is, if it is in possession of the original note that is indorsed in blank.⁷11 M.R.S. § 1–1201(5), (21)(a) (2013); 11 M.R.S. § 3–1301(1).

[¶ 11] This is precisely what the Bank established and the court found in this matter; as the possessor of a note indorsed in blank, the Bank proved its status as the holder of the note and therefore enjoys the right to enforce the debt. See11 M.R.S. § 1–1201(5), (21)(a); 11 M.R.S. § 3–1301(1); Deutsche Bank Nat'l Trust Co. v. Wilk, 2013 ME 79, ¶ 10, 76 A.3d 363 (concluding that the bank's possession of the note, which was indorsed in blank, supported the court's finding that the bank was the holder of the note); Cloutier, 2013 ME 17, ¶ 18, 61 A.3d 1242 (“The parties do not dispute that Bank of America is a holder entitled to enforce the note. Bank of America currently has possession of the note, which is endorsed in blank.”).

2. The Mortgage

[¶ 12] The interest in the note is only part of the standing analysis, however; to be able to foreclose, a plaintiff must also show the requisite interest in the mortgage. Unlike a note, a mortgage is not a negotiable instrument. See 5 Emily S. Bernheim, Tiffany Real Property § 1455 n. 14 (3d ed. Supp.2000). Thus, whereas a plaintiff who merely holds or possesses—but does not necessarily own—the note satisfies the note portion of the standing analysis, the mortgage portion of the standing analysis requires the plaintiff to establish ownership of the mortgage.⁸See Harp, 2011 ME 5, ¶ 9, 10 A.3d 718. In Wilk, for example, Deutsche Bank was able to satisfy the note portion of the analysis by establishing that it was the holder of the note. 2013 ME 79, ¶ 10 & n. 3, 76 A.3d 363. In its attempt to establish its interest in the mortgage, Deutsche Bank produced a series of mortgage assignments from the original lender leading to One West Bank, and then from One West to Deutsche Bank. The purported assignment from One West to Deutsche Bank, however, was dated two weeks before OneWest had acquired the mortgage from its predecessor. Id. ¶ 12. Notwithstanding Deutsche Bank's adequate interest in the note, we vacated the judgment of foreclosure because Deutsche Bank failed to introduce any evidence that it owned the mortgage.⁹Id. ¶ 22.

[¶ 13] Here, in an attempt to establish its ownership of Greenleaf's mortgage, the Bank offered and the court admitted the original mortgage, a mortgage assignment, and a certification of a merger. The first of these documents establishes that the Greenleafs executed a mortgage on November 30, 2006, naming RMS as the lender and MERS as the lender's nominee. In the second document, which is dated April 23, 2011, and signed by Aida Duenas, “assistant secretary,” MERS purports to assign the Greenleaf mortgage to BAC. To...