In re Estate of Frost
| Decision Date | 16 August 2016 |
| Docket Number | Docket: Cum-15-559 |
| Citation | 146 A.3d 118,2016 ME 132 |
| Parties | Estate of Barbara M. Frost |
| Court | Maine Supreme Court |
John F. Lambert, Jr., Esq., and Abigail C. Varga, Esq. (orally), Lambert Coffin, Portland, for appellant Nancy Gamash
Bradley M. Lown, Esq. (orally), Coughlin, Rainboth, Murphy & Lown, P.A., Portsmouth, New Hampshire, for appellee Bank of America, N.A.
Panel: ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
JABAR
, J.
[¶ 1] Nancy Gamash appeals from a summary judgment entered in the Cumberland County Probate Court (Mazziotti, J. ) in a matter derivative to a will contest that she initiated regarding the estate of Barbara M. Frost. She contends that the court erred in concluding that Bank of America, N.A., (BANA) holds a valid note and mortgage encumbering property of Frost's estate, and that the advances on BANA's mortgage are valid obligations of Frost's estate. In the absence of a genuine dispute of material fact on the issue, we affirm the judgment entered in BANA's favor as to the validity of the note and mortgage. With respect to the validity of certain mortgage advances, however, we vacate the judgment entered in favor of BANA and remand for the entry of a summary judgment in favor of Gamash.
[¶ 2] “Viewing the record in the light most favorable to the non-prevailing part[y], the summary judgment record contains the following facts, which are undisputed unless otherwise noted.” Remmes v. Mark Travel Corp. , 2015 ME 63, ¶ 3, 116 A.3d 466
(citation omitted).
[¶ 3] Frost, who was born in 1933, executed a will in March 2000, naming her half-sister, Gamash, as her sole beneficiary. Frost's friend, Thomas Blair, began managing tenants, repairs, and renovations at Frost's multi-unit property and residence in Old Orchard Beach (the property) at some point in the early 2000s. On September 9, 2005, Frost executed a durable financial power of attorney (the POA) appointing Blair as her agent.
[¶ 4] In February 2007, Blair contacted an assisted living facility and paid a deposit to reserve the next available apartment for Frost. Frost moved to the assisted living facility in August 2007. On September 10, 2007, Frost executed another will, eliminating Gamash as legatee and naming Blair as her primary beneficiary. Frost was admitted to the hospital for spinal surgery on September 19, 2007, and discharged to a rehabilitation center on September 27, where she remained until October 10.
[¶ 5] In September 2007, Blair contacted Countrywide Bank and applied for a reverse mortgage on the property, using the POA to sign or initial numerous documents, including a “Certificate of Home Equity Conversion Mortgage Counseling” and a disclosure explaining that the loan could be accelerated if the property ceased to be the borrower's primary residence. Blair also completed a residential reverse mortgage application in which he represented that he was Frost's son and that the borrower, Frost, intended to occupy the property as her primary residence. Frost later signed the application that Blair had completed, personally acknowledging that “the property will be occupied as certified herein.”
[¶ 6] In October 2007, Countrywide issued a letter to Frost stating that it had approved her application for a reverse mortgage subject to the satisfaction of several preconditions, including completion of another counseling certificate without the POA information and review and approval of the POA by the closing agent if the borrower planned to use the POA at closing. Frost then executed a “Certificate of Home Equity Conversion Mortgage Counseling,” and Countrywide's closing agent, Absolute Title, reviewed and approved the POA for use at closing. In November 2007, Countrywide issued closing instructions to Absolute Title, directing Absolute Title to postpone the closing if it “has knowledge or a belief that Borrower owns and occupies another residence not subject to this transaction and does not intend to occupy the Property.” Absolute Title thereafter faxed a message to Countrywide, stating that
[¶ 7] On November 7, 2007, a loan closing agent met with Frost at her assisted living facility, and Frost signed and initialed each page of a promissory note and a deed of trust in connection with a Countrywide reverse mortgage loan in the original principal amount of $950,000. The note provided, inter alia, that “[a]ll outstanding principal, accrued interest, and other charges” would be immediately due and payable if the property ceased to be the borrower's principal residence. During the closing, Frost signed or initialed numerous other documents, including another residential reverse mortgage application, wherein she affirmed that she intended to occupy the property as her primary residence; and a reverse mortgage loan agreement with an attached payment plan and a schedule of closing costs. The closing agent completed a mailing affidavit, directing that future correspondence from Absolute Title would go to Blair's home address.
[¶ 8] On the closing date, $40,000 was advanced on the loan, and $128,634 was paid to Saco & Biddeford Savings to extinguish a preexisting mortgage on the property. Between March 2008 and December 2012, Frost, or Blair as POA for Frost, submitted credit request forms to the initial lender, Countrywide, and later to Countrywide's successor, BANA, drawing more than $250,000 on the mortgage. Of that amount, $208,000 was advanced through Blair's use of the POA.
[¶ 9] When Frost died in December 2012, she owned the property encumbered by BANA's mortgage.1
[¶ 10] After Frost's death, Gamash initiated a will contest, asserting that Frost's 2007 will was a product of Blair's undue influence. In conjunction with that contest, Gamash petitioned for a declaratory judgment that the note and mortgage held by BANA were invalid because they were “created through” a POA that lacked the statutory notices required by 18–A M.R.S.A. § 5–508 (1998 & Supp. 2004)
,2 and because the lender and its agents “were aware that it was Mr. Blair who wanted the reverse mortgage.” Gamash also requested a declaration that the mortgage advances were invalid because they were “secured through the use of” that same defective POA. BANA filed an answer, asserted defenses, and filed a counterclaim requesting a declaratory judgment either that the mortgage and note were valid or that BANA was entitled to an equitable lien on the property in the amount of the mortgage that was used to pay off the preexisting mortgage.
[¶ 11] Gamash moved for a summary judgment, asking the court to declare that defects in the POA rendered the note, the mortgage, and the mortgage advances secured through the POA invalid, and that BANA was not entitled to an equitable lien on the property. BANA filed a cross-motion for summary judgment, requesting the same declaratory relief that it had requested in its counterclaim and arguing, inter alia, that (1) even if the POA was invalid, the mortgage was valid because (a) Blair had apparent authority to act as Frost's agent and (b) Frost ratified Blair's actions in the loan application process, and (2) there was no dispute of fact concerning fraud that would invalidate the mortgage. Gamash opposed BANA's cross-motion, arguing that the mortgage was invalid because BANA, through its predecessor Countrywide and Countrywide's agent, Absolute Title, had “perpetuated and ratified” Blair's fraud in the mortgage documents by proceeding with the transaction when “it knew or should have known” that Frost did not intend to occupy the property as her primary residence.
[¶ 12] On August 19, 2015, the court entered a summary judgment in favor of BANA, concluding that, although the POA was invalid because it did not include certain mandatory notices, the note and mortgage were valid obligations of Frost's estate because Frost had personally executed the loan closing documents and thereby ratified Blair's use of the invalid POA in the loan application process. Gamash thereafter filed a “motion for clarification,” inquiring whether the summary judgment foreclosed a trial on (1) her claims that the note and mortgage were vitiated by fraud, and that the mortgage advances procured by Blair's use of the invalid POA were invalid, or (2) BANA's claim that it was entitled to an equitable lien.
[¶ 13] On October 23, 2015, the court entered an order, pursuant to M.R. Prob. P. 59
and M.R. Civ. P. 59(e), issuing further conclusions and otherwise denying Gamash's motion. The court concluded that Gamash had failed to generate a factual dispute as to fraud in the formation of the mortgage. With respect to the validity of the mortgage advances, the court stated, The court did not reach the issue of whether BANA was entitled to an equitable lien on the property because it concluded that BANA had adequate remedies at law pursuant to its valid mortgage.
[¶ 14] Gamash appealed. See 18–A M.R.S. § 1–308 (2015)
.
[¶ 15] We review a ruling on cross-motions for summary judgment de novo, considering the properly presented evidence and any reasonable inferences that may be drawn therefrom in the light most favorable to the nonprevailing party, in order to determine whether there is a genuine issue of material fact and whether any party is entitled to a judgment as a matter of law. See Budge v. Town of Millinocket , 2012 ME 122, ¶ 12, 55 A.3d 484
; F.R. Carroll, Inc. v. TD Bank, N.A. , 2010 ME 115, ¶ 8, 8 A.3d 646. “When the material facts are not in dispute, we review de novo the trial court's...
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