KEYBANK NAT. ASS'N v. Sargent

• Decision Date: 08 August 2000
• Citation: 2000 ME 153,758 A.2d 528
• Parties: KEYBANK NATIONAL ASSOCIATION v. Edward S. SARGENT et al. Orissa Sargent v. KeyBank National Association. Orissa Sargent v. Westly R. Williams et al.
• Court: Maine Supreme Court

758 A.2d 528

2000 ME 153

KEYBANK NATIONAL ASSOCIATION v. Edward S. SARGENT et al.

Orissa Sargent v. KeyBank National Association.

Orissa Sargent v. Westly R. Williams et al.

Supreme Judicial Court of Maine.

Argued March 7, 2000.

Decided August 8, 2000.

Joseph L. Ferris (orally), N. Lawrence Willey, Jr., Ferris, Dearborn & Willey, Brewer, for the appellant.

Michael S. Haenn (orally), Bangor, for KeyBank National Association.

Anthony J. Giunta (orally), Ellsworth, for Westly and Carney L. Williams.

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

CLIFFORD, J.

[¶ 1] Orissa Sargent appeals from adverse judgments entered against her in the Superior Court (Hancock County) in three separate but consolidated actions related to a business loan made by KeyBank to her son, Edward Sargent, and guaranteed by Sargent. Edward defaulted on the loan, leading to KeyBank's foreclosure and eventual sale of Sargent's home to Westly and Carney Williams. Sargent contends that the court (Mead, J.) erred (1) in the foreclosure action by denying her M.R. Civ. P. 60(b) motion to set aside the judgment and her post-judgment M.R. Civ. P. 65(a) motion for injunctive relief; (2) in her independent action brought against KeyBank, Edward Sargent, and Donna Hart, a vice-president of KeyBank, by denying her request for injunctive relief (Mead, J.), and in dismissing the remainder of her claims (Marsano, J.) pursuant to M.R. Civ. P. 12(b)(6); and (3) in entering a judgment against her (Marsano, J.) in her declaratory judgment action against KeyBank and the Williamses. Finding no error or abuse of discretion, we affirm the judgments.

I. BACKGROUND

[¶ 2] Orissa Sargent's son, Edward, operated his own business as Edward Sargent d/b/a Sargent Farms. On January 19, 1995, Sargent, who was 68 years old, guaranteed a "Commercial Term Note" of $47,500 running from Edward S. Sargent d/b/a Sargent Farms to KeyBank. She also executed a mortgage deed to her home, which was her primary asset, to KeyBank to secure the guarantee. Edward did not pay his mother for her guarantee, and she was not represented by counsel when she signed the guarantee and the mortgage deed. Edward subsequently defaulted on his obligations under the loan, and KeyBank, naming Orissa and Edward Sargent as defendants, commenced a foreclosure action pursuant to the guarantee and the mortgage, docketed as CV-96-82. See 14 M.R.S.A. §§ 6321-6325 (Supp. 1999). In November of 1996, a summary judgment was entered against Sargent in favor of KeyBank. Sargent did not appeal from that judgment.

A. The Rule 60(b) Motion

[¶ 3] On April 14, 1997, Sargent, having obtained new counsel, filed a motion for relief from the foreclosure judgment pursuant to M.R. Civ. P. 60(b). Sargent also filed a motion for a temporary restraining order, preliminary injunction, and permanent injunction pursuant to M.R. Civ. P. 65(a) to prevent her from being evicted from her home and having her property sold. The Rule 60(b) motion seeks leave to amend her pleadings and file affirmative defenses and counterclaims based on, among other things, KeyBank's alleged violations of the Equal Credit Opportunity Act (ECOA), see 15 U.S.C.A. §§ 1691-1691f (1997 & Supp. 2000), the Improvident Transfers of Title Act (ITTA), see 33 M.R.S.A. §§ 1021-1022(1) (1999), and the Maine Consumer Credit Code, Truth-in-Lending provisions, see 9-A M.R.S.A. §§ 8-201 to 8-209 (1997 & Supp. 1999). The motion for injunctive relief was based on the same grounds. The court (Mead, J.) denied both motions in an order dated June 5, 1997.

B. Sargent's First Complaint

[¶ 4] On April 14, 1997, Sargent also filed an independent complaint, docketed as CV-97-21, in which she claims that KeyBank, Donna Hart, and Edward Sargent (1) exerted undue influence on her in violation of the ITTA, see 33 M.R.S.A. § 1022(1) (1999); (2) fraudulently induced Sargent to guarantee Edward's loan; (3) failed to provide Sargent with rescission documents, truth-in-lending documents, and other necessary documents; and (4) were unjustly enriched by the transaction.¹ Sargent seeks the rescission of any promissory notes, guarantees, and real estate mortgages, and she sought an order enjoining KeyBank from foreclosing on her property or collecting any debt against her. She also seeks compensatory and punitive damages.

[¶ 5] The complaint alleges that Sargent had a confidential or fiduciary relationship with all three defendants and that the defendants induced Sargent to guarantee the loan because they knew that Edward was currently involved in a property dispute that could impair the ability of his property to serve as collateral and impair his ability to repay the loan. She also claims that the defendants had a duty to reveal that information to her prior to obtaining her guarantee.

[¶ 6] The court denied Sargent's request for injunctive relief, noting that it would be inappropriate to grant injunctive relief in the independent action when the court had previously denied an identical request for relief in CV-96-82, the foreclosure action. The court then dismissed the claims against KeyBank, concluding that they were waived because they were compulsory counterclaims that should have been raised in the foreclosure action. The court also added that "any claim derived from truth-in-lending laws fails to state a claim because the loan at issue was a commercial, not [a] consumer, loan." The court subsequently dismissed Sargent's claims against Donna Hart, holding that her claims against Hart individually were barred because Hart was an agent of KeyBank and was not subject to individual liability.

C. Sargent's Second Complaint

[¶ 7] On June 4, 1998, Sargent filed a second complaint in the Superior Court, docketed as CV-98-33, an action for a declaratory judgment. In that complaint, Sargent claims that KeyBank did not comply with the notice provisions of 14 M.R.S.A. § 6323 (Supp. 1999) because in its first notice of public sale, it published a picture of a home other than Sargent's. Naming both KeyBank and the purchasers at the public sale, the Williamses, as defendants, Sargent claims that the notice deficiencies rendered the sale void or voidable.

D. Consolidation of the Three Actions

[¶ 8] In August of 1998, the court (Kravchuk, C.J.) ordered that the foreclosure action, CV-96-82, and Sargent's two independent complaints, CV-97-21 and CV-98-33, be consolidated. On May 6, 1999, a bench trial in CV-98-33, Sargent's action for a declaratory judgment, was held on the limited issue of whether the public sale was void or voidable. The court (Marsano, J.) concluded that KeyBank had adequately complied with the notice requirements of 14 M.R.S.A. § 6323 and that printing the wrong photo in the initial notice was harmless error. The court also held that the Williamses were bona fide purchasers for value and that they were protected by the recording statute. See 33 M.R.S.A. § 201 (1999). The court entered final judgment not only in CV-98-33, but also in CV-96-82 and CV-97-21 as well. Sargent appealed in all three cases.

II. DENIAL OF RULE 60(b) RELIEF

[¶ 9] Sargent contends that the trial court erred in denying her motion for Rule 60(b) relief from judgment. Before addressing whether the trial court properly exercised its discretion in denying Sargent's motion, however, we must first address KeyBank's argument that Rule 60(b) relief is never available when the motion is filed after the 90-day statutory right of redemption has expired.

[¶ 10] Title 14, section 6322 allows a mortgagor a 90-day period after entry of the foreclosure judgment in which to pay the total amount due on the mortgage and redeem the mortgage. See 14 M.R.S.A. § 6322 (Supp. 1999). Because the redemption period begins "to run upon the entry of the judgment of foreclosure," see 14 M.R.S.A. § 6322 (Supp. 1999), that period expired in this case on January 30, 1997. Sargent did not file her motion for Rule 60(b) relief until April 14, 1997, nearly two and a half months later.

[¶ 11] Because the "right of redemption, once extinguished, cannot be revived by any court, nor can the period of redemption be abridged or enlarged by operation of law," see Smith v. Varney, 309 A.2d 229, 232 (Me.1973),

KeyBank has argued that allowing Rule 60(b) relief after the expiration of 90-day redemption period is impermissible, as it operates to revive and extend the redemption period. There are exceptional circumstances, however, where a court of equity may provide relief, even after the 90-day redemption period has expired. See Smith v. Varney, 309 A.2d at 232. Rule 60(b) itself provides that equity may be invoked to provide relief from judgment in certain circumstances, and section 6322 does not preclude such relief.² In this case, the trial court did not abuse its discretion in finding that exceptional circumstances were not present in this case and denying Rule 60(b) relief from judgment.

[¶ 12] Sargent argues that the failure of KeyBank to respond to a request for documents made prior to the entry of the foreclosure judgment amounts to fraud, misrepresentation or other misconduct that warrants relief from judgment pursuant to M.R. Civ. P. 60(b)(3).³ She also argues that KeyBank's violations of the ITTA, see 33 M.R.S.A. §§ 1021-1022(1) (1999), the ECOA, see 15 U.S.C.A. § 1691(a)(1) (1999), and the Maine Consumer Credit Code—Truth-in-Lending Act, see 9-A M.R.S.A. § 8-204 (1997) require the court to grant her relief from judgment.

[¶ 13] The party seeking relief from judgment pursuant M.R. Civ. P. 60(b) bears the "burden of proving that the judgment should be set aside." See Beck v. Beck, 1999 ME 110, ¶ 6, 733 A.2d 981, 983

. We review the denial of a Rule 60(b) motion for abuse of discretion and will set aside the judgment only if the failure to grant the relief "works a plain and unmistakable injustice against the defendant." See Harris v. PT Petro Corp. v. Ballot, 650 A.2d 1346, 1348 (Me.1994)....