Hsbc Bank U.S. v. Gabay

• Decision Date: 15 September 2011
• Docket Number: Docket No. Cum–10–581.
• Citation: 2011 ME 101,28 A.3d 1158
• Parties: HSBC BANK USA, N.A., as Trustee under the Pooling and Servicing Agreement Dated as of December 1, 2005, Fremont Home Loan Trust 2005–Ev.Janelle GABAY.
• Court: Maine Supreme Court

28 A.3d 1158
2011 ME 101

HSBC BANK USA, N.A., as Trustee under the Pooling and Servicing Agreement Dated as of December 1, 2005, Fremont Home Loan Trust 2005–E
v.
Janelle GABAY.

Docket No. Cum–10–581.

Supreme Judicial Court of Maine.

Submitted on Briefs: April 27, 2011.Decided: Sept. 15, 2011.

[28 A.3d 1160]

Geoffrey S. Lewis, Esq., Hastings Law Office, P.A., Fryeburg, on the briefs, for appellant Janelle Gabay.Elizabeth M. Crowe, Esq., Bendett & McHugh, P.C., Farmington, Connecticut, on the briefs, for appellee HSBC Bank USA, N.A., as Trustee Under the Pooling and Servicing Agreement Dated as of December 1, 2005, Fremont Home Loan Trust 2005–E.

[28 A.3d 1161]

Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.ALEXANDER, J.

[¶ 1] Janelle Gabay appeals from a summary judgment entered in the District Court (Bridgton, Powers, J.) in favor of HSBC Bank USA, N.A., as Trustee under the Pooling and Servicing Agreement dated as of December 1, 2005, Fremont Home Loan Trust 2005–E, on HSBC's complaint for foreclosure and sale pursuant to 14 M.R.S. §§ 6321–6325 (2010).¹ Gabay argues that HSBC's motion for summary judgment should have been denied because HSBC's statement of material facts left unresolved genuine issues of material fact as to (1) whether HSBC is the owner and holder, pursuant to a valid endorsement, of the promissory note due to HSBC's failure to present adequate evidence of such; (2) the order of priority among creditors; (3) the sufficiency of identification of the court costs that HSBC sought to collect; and (4) the identification of the premises to be foreclosed upon. Because genuine issues of material fact exist, we vacate the judgment and remand for further proceedings.

I. CASE HISTORY

[¶ 2] Janelle Gabay resides in Florida. She owns real property in Maine located at 19 Common Way Road in Naples.² On or about September 23, 2005,³ Gabay executed and delivered a promissory note in the

[28 A.3d 1162]

principal amount of $750,000 to Fremont Investment and Loan. To secure the note, Gabay executed and delivered a mortgage of “certain real property located in Naples, Cumberland County, Maine” to Mortgage Electronic Registration Systems, Inc. (MERS) on September 23, 2005, which mortgage was recorded.⁴ Although the mortgage agreement, cited as support for HSBC's statement of material fact stating that the mortgage related to “certain real property located in Naples, Cumberland County, Maine,” identifies the mortgaged property by street address, HSBC's statement of material facts does not specifically identify the property that is subject to the note and mortgage by street address.

[¶ 3] Gabay defaulted on the note and was in breach of the mortgage agreement when she failed to make the monthly payments due on the note beginning on September 1, 2008. A notice of the default dated October 17, 2008, was sent to Gabay, advising her of her opportunity to cure and of the intent to accelerate the maturity date of the note if the default was not cured. HSBC is the current holder of the mortgage. Although not stated in the statement of material facts itself, record references indicate that HSBC became the holder of the mortgage by virtue of an assignment from MERS dated December 22, 2008. HSBC stated in its statement of material facts that it is also the current holder of the note, although, for reasons discussed below, the citations offered in support of that fact do not properly support that statement.

[¶ 4] As of June 23, 2010, a total of $851,235.39 was due under the note and secured by the mortgage, with interest accruing at $169.64 per day, plus costs of collection, “including reasonable attorneys' fees and costs.” Attorney fees consisted of a flat fee of $1500 for an uncontested foreclosure action requiring summary judgment. The terms of the mortgage provide that the lender has the right to collect all costs allowed by law, including reasonable attorney fees and costs of title evidence.

[¶ 5] On January 6, 2009, HSBC filed a complaint for foreclosure and sale against Gabay, naming Lake Sebago Estates Homeowners Association (the Association) as a party-in-interest.⁵ HSBC did not reference the Association in its statement of material facts. According to his sworn certification, a deputy sheriff in Pinellas County, Florida, personally served a copy of the complaint and summons on Gabay in February 2009. Gabay did not file an answer.

[¶ 6] HSBC filed a motion for summary judgment on July 27, 2010. HSBC's statement of material facts was supported primarily by record references to an affidavit of a foreclosure manager at HSBC (the Lender affidavit). Gabay did not file an opposition to HSBC's summary judgment motion. On August 25, 2010, the court granted HSBC's motion for summary judgment. The court ordered Gabay to pay $852,735.39 within ninety days of the entry of judgment, and, if payment was not timely made, ordered the sale of the property.

[¶ 7] Gabay sought and was granted an enlargement of time pursuant

[28 A.3d 1163]

to M.R.App. P. 2(B)(5) to file a notice of appeal from the judgment of foreclosure and sale. Gabay stated that, notwithstanding the Florida sheriff's certification, she had not been served with the complaint, had not received a copy of HSBC's motion for summary judgment, and had no knowledge of the foreclosure action until she received a copy of the court's judgment in September 2010.⁶ Gabay filed a notice of appeal on October 12, 2010, which the District Court deemed timely filed.⁷II. LEGAL ANALYSIS

[¶ 8] We review a grant of summary judgment de novo, viewing the evidence in the light most favorable to the nonmoving party to determine “whether the parties' statements of material facts and the referenced record evidence reveal a genuine issue of material fact.” JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 15, 10 A.3d 718. In so doing, we consider only the material facts set forth, and the portions of the record referred to, in the statements of material facts. Salem Capital Grp., LLC v. Litchfield, 2010 ME 49, ¶ 4, 997 A.2d 720. In summary judgment practice, the court “is neither required nor permitted to independently search a record to find support for facts offered by a party.” Levine v. R.B.K. Caly Corp., 2001 ME 77, ¶ 9, 770 A.2d 653. A party's motion for summary judgment may not be granted if that party fails to properly put the material facts before the court, “regardless of the adequacy, or inadequacy, of the nonmoving party's response.” Id. ¶ 5.

[¶ 9] HSBC contends that it need not properly identify which paragraph of a supporting record reference is the basis for a particular statement of material fact when (i) the supporting record is included in its entirety in the summary judgment record, or (ii) the critical paragraph in the record has been cited to support a different material fact. However, our rules require that each statement of material fact must directly refer the court to “the specific portions of the record from which each fact is drawn.” Id. ¶ 9; M.R. Civ. P. 56(h)(1), (4). We have repeatedly noted the importance of applying the summary judgment rules strictly in the context of mortgage foreclosures. See HSBC Mortg. Servs., Inc. v. Murphy, 2011 ME 59, ¶ 9, 19 A.3d 815; JPMorgan Chase Bank, 2011 ME 5, ¶ 15, 10 A.3d 718.

[¶ 10] “In residential mortgage foreclosure actions, certain minimum facts

[28 A.3d 1164]

must be included in a mortgage holder's statement of material facts on summary judgment.” HSBC Mortg. Servs., 2011 ME 59, ¶ 9, 19 A.3d 815; see also M.R. Civ. P. 56(j). To support a summary judgment motion in a residential mortgage foreclosure action, the mortgage holder must include, at a minimum, the following facts in its statement of material facts, each supported by evidence of a quality that could be admissible at trial:

(1) The existence of the mortgage, including the book and page number of the mortgage, and an adequate description of the mortgaged premises, including the street address, if any;

(2) Properly presented proof of ownership of the mortgage note and the mortgage, including all assignments and endorsements of the note and the mortgage;

(3) A breach of condition in the mortgage;

(4) The amount due on the mortgage note, including any reasonable attorney fees and court costs;

(5) The order of priority and any amounts that may be due to other parties in interest, including any public utility easements;

(6) Evidence of properly served notice of default and mortgagor's right to cure in compliance with statutory requirements;

(7) After January 1, 2010, proof of completed mediation (or waiver or default of mediation), when required, pursuant to the statewide foreclosure mediation program rules; and

(8) If the homeowner has not appeared in the proceeding, a statement, with a supporting affidavit, of whether or not the defendant is in military service in accordance with the Servicemembers Civil Relief Act.

HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n. 6, 19 A.3d 815; Chase Home Fin. LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508; see also M.R. Civ. P. 56(j) (providing, among other things, that a summary judgment may not be entered in a foreclosure action unless it is determined that “the plaintiff has properly certified proof of ownership of the mortgage note and produced evidence of the mortgage note, the mortgage, and all assignments and endorsements of the mortgage note and the mortgage”).

[¶ 11] Our analysis...