Reynolds v. Bank of America, N.A.
| Decision Date | 17 March 2020 |
| Docket Number | RE-18-55 |
| Parties | CLAYTON B. REYNOLDS, Plaintiff, v. BANK OF AMERICA, N.A., Defendant. |
| Court | Maine Superior Court |
ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
Plaintiff Clayton Reynolds ("Reynolds") complains[1] for declaratory judgment against defendant Bank of America, N.A. ("BANA") with respect to a mortgage it holds on property located at 6 Winter Street Extension, Saco, Maine ("the premises"), seeking an order that declares the mortgage and note are unenforceable and that Reynolds holds the premises free and clear of the mortgage. BANA counterclaims for unjust enrichment in the amount owed on the note, or, in the alternative, for the sum cost of the taxes and insurance premiums BANA has covered since Reynolds stopped making payments on the loan. Reynolds and BANA have filed cross-motions for summary judgment on Reynolds's declaratory judgment action and BANA's unjust enrichment counterclaims. This court entertained oral arguments on the motions on February 26, 2020. For the reasons set forth below, Reynolds's motion for summary judgment on its declaratory judgment action and on BANA's counterclaims for unjust enrichment is granted and BANA's motion for summary judgment is denied.
On November 14, 2009, BANA extended a mortgage loan for the principal amount of $195, 260 to Reynolds, which is evidenced by a promissory note and secured by a mortgage on the premises. (Defendant's Statement of Material Facts hereinafter "DSMF," ¶ 1; Plaintiffs Statement of Material Facts, hereinafter 'TSMF," ¶ 1; Defendant's Statement of Additional Material Facts hereafter "DSAMF, "¶ 1.) BANA is the current owner of the loan and holder of the mortgage and note. (DSMF ¶¶ 1, 6, 14.)
The second paragraph of the mortgage provides that the borrower "shall include" with each monthly payment on the principal, interest and any late charges a sum equal to, inter alia, taxes on the mortgaged property; premiums for insurance required under the terms of the mortgage, including hazard insurance; and mortgage insurance premiums for any year in which the lender was required to pay such a premium to the Secretary of Housing and Urban Development (collectively "escrow items"). (DMSF ¶ 2; DSAMF ¶ 2.) Under mortgage's seventh paragraph, the lender had the option-but was not required-to "pay whatever is necessary to protect the value of the [premises]," including on the escrow items, if the borrower failed to make any payments for these expenses. (DSMF ¶ 4; DSAMF ¶ 4.) By executing the mortgage, Reynolds acknowledged that the document provided for the payment of the escrow items directly by the borrower under the second paragraph or by the lender under paragraph seven if the borrower failed to do so. (DSMF ¶¶ 3, 5; DSAMF ¶¶ 3, 5.) Other than the note and mortgage, no other agreements) exist between BANA and Reynolds regarding payment of the escrow items. (PSMF ¶ 9.)
Reynolds last made a payment on the loan in February 2010, resulting in an unpaid principal balance of $194, 811.08. (DSMF¶¶ 10-11; DSAMF ¶¶ 10-11.)
On August 27, 2015, BANA filed a complaint to foreclose on the mortgage ("Foreclosure Action"). (DSMF ¶ 15; PSMF ¶¶ 3, 5; DSAMF ¶ 15.) The Superior Court (York County, Douglas, J.) entered judgment ("Judgment") in Reynolds's favor on BANA's Foreclosure Action on December 28, 2016-a decision BANA did not appeal. (DSMF ¶ 16; PSMF ¶¶ 6, 7; DSAMF ¶ 16.)
Between Reynolds's last loan payment in February 2010 and entry of the Judgment in December 2016, BANA made payments towards the premises's property taxes ($13, 933.36), homeowner insurance premiums ($3, 984.44) and FHA mortgage insurance premiums ($6, 214.44) in the aggregate amount of $24, 132.24. (DSMF ¶¶ 20, 22, 24, 25; DSAMF ¶¶ 20, 22, 24, 25.) Between the entry of the Judgment on December 28, 2016 and October 16, 2019, BANA paid an additional $8, 675.24-$5, 492.52 in property taxes, $1, 657 in homeowner's insurance premiums, and $1, 525.72 in mortgage insurance premiums.[2] (DSMF ¶¶ 26-28; DSAMF ¶¶ 26-28.) BANA continued to make these payments even after it entered its appearance in the present action on July 18, 2018. (Plaintiffs Statement of Additional Material Facts, hereinafter 'TSAMF," ¶ L.) Reynolds has not compensated BANA for its payment of any of these expenses.[3] (DSMF ¶¶ 30, 32; DSAMF ¶¶ 30, 32.) The parties dispute whether, as a matter of fact, the terms of the mortgage constitute an agreement concerning the payment of these expenses since entry of the Judgment on December 28, 2016.[4] (PSMF ¶ 10, as qualified by Defendant's Opposing Statement of Material Facts, hereinafter "DOSMF," ¶ 10.)
"Cross motions for summary judgment neither alter the basic Rule 56 standard, nor warrant the grant of summary judgment per se." Estate of Mason v. Amica Mut. Ins. Co., 2017 ME 58, ¶ 8, 158 A.3d 495. Thus, summary judgment is proper, just as it is when only one party motions for it, when a review of the parties' statements of material facts and the record evidence to which they refer, considered in the light most favorable to a nonprevailing party, establishes that mere is no genuine issue of material fact in dispute and that the prevailing party is entitled to judgment as a matter of law. Estate of Frost, 2016 ME 132, ¶ 15, 146 A.3d 118 (); see Estate of Kay v. Estate of Wiggins, 2016 ME 108, ¶ 9, 143 A.3d 1290 (). A contested fact is "material" if has the potential to influence the outcome of the case, and a "genuine" issue of material fact exists if the factfinder must decide between competing versions of the truth, hems v. Concord General Mut. Ins. Co., 2014 ME 34, ¶ 10, 87 A.3d 732. Judgment as a matter of kw is not warranted if "any reasonable view of the evidence could sustain a verdict for the opposing party pursuant to the substantive law that is an essential element of the claim." Merriam v. Wanger, 2000 ME 159, ¶ 7, 757 A.2d 778. When material facts are contested, the dispute must be resolved through fact-finding at trial-even if the likelihood of success at trial by one party or the other is small. Rose v. Parsons, 2015 ME 73, ¶ 4, 118 A.3d 220; Curtis v. Porter, 2001 ME 158, ¶ 7, 784 A.2d 18. This holds true because summary judgment is neither a substitute for trial when a material fact is in dispute, Cookson v. Brewer Sch. Dep't, 2009 ME 57, ¶ 12, 974 A.2d 276, nor an arena for trial by affidavit, Hut% v. Alden, 2011 ME 27, ¶ 16, 12 A.3d 1174.
If a properly supported motion is filed, then the burden shifts to the nonmoving party to demonstrate that a factual dispute exists sufficient to establish a prima facie case for each element of the claim or defense in order to avoid summary judgment. Watt v. Unifirst Corp., 2009 ME 47, ¶ 21, 969 A.2d 897. The evidence proffered by the nonmoving party is assessed for sufficiency-not persuasiveness-such that a court can make a factual determination without speculating. Estate of Smith v. Cumberland County, 2013 ME 13, ¶ 19, 60 A.3d 759.
Reynolds contends that the Law Court's recent decisions in Pushard v. BANA and Fannie Mae v. Deschaine are directly applicable precedent that binds this court to find that the mortgage and note are unenforceable and that the mortgage should be discharged. Pushard v. Bank of America, NA.., 2017 ME 230, 175 A.3d 103; Fed. Nat'l Mortg. Assoc, v. Deschaine, 2017 ME 190, 170 A.3d 230. This court finds Reynolds's argument compelling-even in light of BANA's suggestion that these decisions should be reconsidered as detached from prior case law and/or internally muddled.[5]
1. Stare Decisis
As an initial matter, it is important to acknowledge that stare decisis dictates that this court follow precedent that is directly applicable to facts before it, regardless of whether or not this court agrees with BANA's position, "unless the passage of time and changes in conditions justify reexamining the law stated in [a] prior opinion and reaching a different result." Estate of Galipeau v. State Farm Mut. Auto. Ins. Co., 2016 ME 28, ¶ 15, 132 A.3d 1190. Only roughly three years have elapsed since the Law Court rendered its decision in cases that raised identical issues to those before this court now- i.e., the enforceability of a mortgage and note and the dischargeability of the mortgage after the mortgagee loses its foreclosure action. Assuming, for the sake of argument and with great reluctance, that this court is even in a position to question the Law Court's decision-making process in Pushard and Deschaine, this court finds that there has been no fundamental change in conditions that might warrant taking a second look at what has become settled law in this state. While stare decisis might, in theory, "become a self-defeating principle" if "it operates so inflexibly as to deny to judges the power to move ahead amidst the onrushing currents of change," it provides in this case an essential lodestar to guide this court's analysis because the precedent relied upon remains undimmed by the passage of time. See Moulton v. Moulton, 309 A.2d 224, 228 (Me. 1973).
Putting aside the potential effect of stare decisis for a moment, this court does not find persuasive either of BANA's arguments for why Pushard and Deschaine should not apply to the case at bar-i.e that the Law Court misapplied res judicata in these cases because it has only been recognized as an affirmative defense in prior decisions and that Pushard is defective for lack of internal consistency. Res judicata can be used as a shield by a litigant to protect itself from attacks waged by a novel opponent on the same grounds as those raised against it in prior...
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