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

• Decision Date: 07 February 2013
• Docket Number: Docket No. Yor–12–361.
• Parties: BANK OF AMERICA, N.A. v. James A. CLOUTIER.
• Court: Maine Supreme Court

61 A.3d 1242

2013 ME 17

BANK OF AMERICA, N.A.

v.James A. CLOUTIER.

Docket No. Yor–12–361.

Supreme Judicial Court of Maine.

Argued: Jan. 16, 2013.

Decided: Feb. 7, 2013.

Elizabeth Papez, Esq. (orally), Winston & Strawn LLP, Washington, District of Columbia; and Corin R. Swift, Esq., and Jeff Goldman, Esq., Bingham McCutchen LLP, Portland, for Bank of America, N.A.

L. Scott Gould, Esq., Cape Elizabeth; Thomas A. Cox, Esq. (orally), Portland; and Andrea Bopp Stark, Esq., Molleur Law Office, Biddeford, for James A. Cloutier.

Catherine R. Connors, Esq., John A. Aromando, Esq., and Michelle Bush, Esq., Pierce Atwood LLP, Portland, for amicus curiae Federal Home Loan Mortgage Corporation.

Peter L. Murray, Esq., Murray, Plumb & Murray, Portland, for amici curiae Legal Services Center of Harvard Law School and National Consumer Law Center.

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

ALEXANDER, J.

[¶ 1] The Superior Court (York County, Fritzsche, J.), acting pursuant to M.R.App. P. 24(a), has reported a question of law to us: “What is the proof that is required for a party to prove ‘ownership’ of the mortgage note and mortgage for purposes of foreclosure, as required by the decision of the Law Court in Chase Home Finance, LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508?”

[¶ 2] The question arose in an action brought by Bank of America, N.A. against James A. Cloutier ¹ for foreclosure on a residential mortgage. We accept the report and hold that a plaintiff in a foreclosure action must identify the owner or economic beneficiary of the note and provide certain other evidence as described in 14 M.R.S. § 6321 (2012).

I. CASE HISTORY

[¶ 3] The parties stipulated to the following facts for purposes of addressing the Superior Court's reported question.

[¶ 4] On January 27, 2006, James A. Cloutier executed a promissory note to American Money Centers, Inc. and a mortgage deed of property in Saco, which secures the note. The mortgage deed identified Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee of record. MERS served as the nominee for American Money Centers and its successors and assigns. MERS subsequently assigned the mortgage to BAC Home Loans Servicing, LP.

[¶ 5] The note now reflects a series of endorsements beginning with American Money Centers and ending in a blank endorsement. American Money Centers endorsed the note to the order of Countrywide Bank, N.A., which endorsed it to the order of Countrywide Home Loans, Inc., which then endorsed it in blank. In March of 2006, the Federal Home Loan Corporation (Freddie Mac) purchased the note from Countywide Home Loans, which was the owner of the note at the time. Freddie Mac has not sold the note nor has it transferred its beneficial interest in the note. At present, Bank of America possesses the note, which still bears a blank endorsement.²

[¶ 6] Bank of America services Cloutier's loan on behalf of Freddie Mac. Bank of America, whose actions are governed by a contract between it and Freddie Mac, has pursued this foreclosure action in its capacity as servicer.³

[¶ 7] Cloutier failed to make the payment due on January 1, 2010, and has not made any subsequent payments. Bank of America filed a complaint for foreclosure in the Superior Court in August of 2010. After mediation, Bank of America moved for a summary judgment. Before acting on the motion, the court reported the question to us pursuant to 4 M.R.S. § 57 (2012) and M.R.App. P. 24(a).

II. LEGAL ANALYSIS

A. Reported Question

[¶ 8] When a trial court reports a question to us pursuant to M.R.App. P. 24(a), we conduct an independent examination to decide if answering the question is consistent with our basic function as an appellate court, or would improperly place us in the role of an advisory board. Baker v. Farrand, 2011 ME 91, ¶ 7, 26 A.3d 806. In this examination, we consider whether (1) the question reported is of sufficient importance and doubt to outweigh the policy against piecemeal litigation; (2) the question might not have to be decided because of other possible dispositions; and (3) a decision on the issue would, in at least one alternative, dispose of the action. Id.Rule 24 is an exception to the final judgment rule that should be used sparingly. Liberty Ins. Underwriters, Inc. v. Estate of Faulkner, 2008 ME 149, ¶ 5, 957 A.2d 94.

[¶ 9] Applying these standards, the Superior Court determined that reporting this question was appropriate. The Superior Court noted that the reported question has been presented to multiple trial courts with different results, which caused it to believe that the question was of sufficient doubt and importance to seek our guidance. Further, given the plaintiff's pending motion for summary judgment, and the apparent absence of disputed facts in the record, it did not appear that resolution of the question could be avoided through other dispositions. Finally, the court stated that our answer, in at least one alternative, would finally dispose of the case.

[¶ 10] Our independent review of the record leads us to concur with the Superior Court's conclusions. See Baker, 2011 ME 91, ¶ 7, 26 A.3d 806. Accordingly, we accept the reported question. See id. ¶ 14.

B. Proof of Ownership

[¶ 11] The Superior Court's question arises from a single sentence in 14 M.R.S. § 6321,⁴ the foreclosure by civil action statute:

The mortgagee shall certify proof of ownership of the mortgage note and produce evidence of the mortgage note, mortgage and all assignments and endorsements of the mortgage note and mortgage.

The Legislature added this sentence to the foreclosure by civil action statute as part of comprehensive foreclosure reform in 2009. See P.L.2009, ch. 402, § 17 (effective June 15, 2009). Section 6321, which is lengthy, is reprinted as an attachment following this opinion.

[¶ 12] We interpret the meaning of a statute de novo by analyzing its plain language in the context of the whole statutory scheme. Fuhrmann v. Staples the Office Superstore E., Inc., 2012 ME 135, ¶ 23, 58 A.3d 1083. If the statute's meaning is unambiguous, and not illogical or absurd, that meaning controls, and we do not look beyond its words. Russell v. ExpressJet Airlines, Inc., 2011 ME 123, ¶ 16, 32 A.3d 1030. Only when a statute's meaning is ambiguous do we consider other evidence of legislative intent. Michalowski v. Bd. of Licensure in Med., 2012 ME 134, ¶ 24 n. 6, 58 A.3d 1074.

[¶ 13] The plain language at issue creates two requirements: that the mortgagee “certify proof of ownership of the mortgage note” and that the mortgagee “produce evidence” of various documents and transactions. 14 M.R.S. § 6321. Our cases citing this sentence have applied only the second requirement related to evidence of ownership. In Wells Fargo Bank, NA v. deBree, we vacated a summary judgment in favor of a bank when the bank “failed to supply evidence that it owns the deBrees' note and mortgage.” 2012 ME 34, ¶¶ 7–11, 38 A.3d 1257. Similarly, in HSBC Bank USA, N.A. v. Gabay, we vacated a summary judgment when the plaintiff failed to cite evidence satisfying the requirement in its statement of material facts. 2011 ME 101, ¶¶ 1, 12–18, 28 A.3d 1158. In addition, we acknowledged, but did not apply, this sentence in Mortgage Electronic Registration Systems, Inc. v. Saunders, 2010 ME 79, ¶ 12 n. 4, 2 A.3d 289.

[¶ 14] The requirement in section 6321, paragraph 3 that a plaintiff “certify proof of ownership of the mortgage note” is the basis for Cloutier's contention that only the economic beneficiary of a mortgage note may sue for foreclosure. Cloutier argues that only an “owner” and not a “holder” or other entity entitled to enforce the note may bring a foreclosure action. Title 11 M.R.S. § 3–1301 (2012) lists who is entitled to enforce an instrument pursuant to Article 3–A of Maine's version of the Uniform Commercial Code (UCC).⁵

[¶ 15] Additionally, the first sentence in section 6321 clarifies that it is consistent with section 3–1301 of the UCC. It provides: “After breach of condition in a mortgage of first priority, the mortgagee or any person claiming under the mortgagee may proceed for the purpose of foreclosure....” 14 M.R.S. § 6321 (emphasis added). This sentence, in the first paragraph, suggests that the “certify proof of ownership of the mortgage note” requirement, in the third paragraph, does not impose a standing requirement, because standing to bring a foreclosure action has been addressed in the first paragraph. The “proof of ownership” language appears in the middle of a long paragraph concerning procedural requirements and adjoins another phrase concerning evidentiary requirements. As between the first and third paragraphs, the first controls standing and the third addresses procedural prerequisites that an entity with standing must satisfy to maintain an action.

[¶ 16] The requirement that a plaintiff “certify proof of ownership of the mortgage note” does require that a plaintiff do more than provide the evidence described in the second half of the sentence. 14 M.R.S. § 6321. The statute does not define “ownership.” In this context, we interpret “certify proof of ownership” to require the plaintiff to identify the owner or economic beneficiary of the note and, if the plaintiff is not the owner, to indicate the basis for the plaintiff's authority to enforce the note pursuant to Article 3–A of the UCC. See11 M.R.S. § 3–1301. We have previously connected a party's right to bring an action for foreclosure to its right to enforce pursuant to 11 M.R.S. § 3–1301. See Saunders, 2010 ME 79, ¶ 12, 2 A.3d 289;see also JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 9 n. 3, 10 A.3d 718.

[¶ 17] Cloutier argues that although Article 3–A controls the right to enforce a promissory note, section 6321 further limits Article 3–A. If we could not harmonize section 6321 and Article 3–A, section 6321 would govern because it deals specifically with the subject of foreclosure. Michalowski, 2012 ME 134, ¶ 12, 58 A.3d...