U.S. Bank Nat'Lass'N v. Manning

• Decision Date: 13 November 2014
• Docket Number: Docket No. Cum–13–473.
• Citation: 2014 ME 96,97 A.3d 605
• Court: Maine Supreme Court
• Parties: U.S. BANK NATIONAL ASSOCIATION as Trustee for RASC 2005KS9 v. Thomas MANNING et al.

97 A.3d 605

2014 ME 96

U.S. BANK NATIONAL ASSOCIATION as Trustee for RASC 2005KS9

v.Thomas MANNING et al.

Docket No. Cum–13–473.

Supreme Judicial Court of Maine.

Argued: June 10, 2014.

Decided: July 24, 2014.

As Corrected Nov. 13, 2014.

Elizabeth M. Crowe, Esq., Bendett & McHugh, P.C., Farmington, Connecticut, and William A. Fogel, Esq. (orally), Portland, on the briefs, for appellant U.S. Bank N.A.

Kelly W. McDonald, Esq., Murray, Plumb & Murray, Portland, orally and on the briefs, for appellee Thomas Manning.

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

MEAD, J.

[¶ 1] U.S. Bank National Association as Trustee for RASC 2005KS9 (the Bank) appeals from a judgment of the Superior Court (Cumberland County, Wheeler, J.) dismissing with prejudice its foreclosure complaint against Thomas Manning as a sanction for its failure to comply with the court's discovery order. The Bank contends that the court's action constitutes an abuse of discretion given the circumstances of this litigation, and that the court erred at several points as the case progressed through its pretrial stages. We agree and vacate the judgment.

I. BACKGROUND

[¶ 2] In July 2010, the Bank filed an amended complaint for residential foreclosure against Thomas Manning and several parties-in-interest who are not involved in this appeal. The complaint alleged that the Bank is the current holder of a $520,000 promissory note executed by Manning on August 2, 2005, and of a mortgage on Manning's property in Falmouth securing the note. The complaint further alleged that Manning was in default because he had made no payments on the note beginning with the payment due in February 2008, and that he owed $631,048.25 as of April 2010.

[¶ 3] After the complaint was filed, the case progressed through many procedural steps, including the following key events:

• 8/22/11: The court issued a standard scheduling order specifying a discovery deadline of April 22, 2012, and warned that failure to comply with the scheduling order could result in sanctions.

• 3/13/12: At Manning's request, the discovery deadline was extended to July 21, 2012.

• 7/25/12: At the Bank's request, the discovery deadline was enlarged to November 30, 2012.

• 11/7/12: In anticipation of seeking an order pursuant to M.R. Civ. P. 37(a) compelling discovery, Manning wrote a letter to the court requesting a hearing pursuant to M.R. Civ. P. 26(g)(1).

• 11/9/12: In response to Manning's November 7, 2012, letter, the court, without holding a hearing, issued an order requiring the Bank to provide discovery by November 30, 2012, and to “pay to Defendant reasonable expenses in the amount of $150 within 30 days.” The order provided that “[f]ailure to comply ... will result in a dismissal with prejudice of the complaint.” The order was entered on the docket on November 14, 2012, and mailed to the parties the same day.

• 12/13/12: Manning filed a letter with the court asking it to dismiss the complaint with prejudice because the Bank had failed to pay the $150 sanction within 30 days of the November 9, 2012, order.

• 12/14/12: Manning moved to continue the trial and to amend the scheduling order, asserting that “[w]hile [the Bank] has provided some [discovery] responses by the deadline of November 30, 2012, those responses were deficient in several respects,” and asserting that the Bank had not provided potential dates for a noticed deposition.

• 12/17/12: The Bank filed a letter with the court responding to Manning's December 13, 2012, letter, asserting that it had already produced “over 1700 pages of responsive discovery to [Manning's] counsel,” and that it had paid the $150 sanction that same day in accordance with “our position that the payment is due today, December 17, 2012.”

• 12/19/12: The court granted Manning's December 14, 2012, motion to continue and ordered that the deposition of Bank officials be completed by February 28, 2013.

• 1/8/13: Manning moved the court for an order on his December 13, 2012, letter, again requesting a dismissal of the complaint with prejudice on the ground that the Bank paid the $150 sanction late.

• 1/30/13: Manning filed a letter with the court asserting that the Bank had failed to oppose his January 8, 2013, motion for an order of dismissal, and therefore the Bank had “waiv[ed] all objections to the motion.”

• 2/1/13: The court, without holding a hearing, entered an order dismissing the complaint with prejudice “for failure to comply with the Court's Discovery Order.” The order was mailed to the parties on February 4, 2013.

• 2/4/13: The Bank filed a letter dated February 2, 2013, in which it disputed the representations made in Manning's December 14, 2012, motion and opposed his January 30, 2013, letter. The Bank asserted that it had previously noted its opposition to a dismissal in its December 17, 2012, letter to the court.

• 2/14/13: The Bank moved for reconsideration of the court's February 1, 2013, dismissal order, and for a hearing. Manning opposed the motion for reconsideration, attaching supporting affidavits from himself and his attorney.

• 4/18/13: The court, without holding a hearing, amended its February 1, 2013, dismissal order “to reflect the dismissal is without prejudice.”

• 4/25/13: Manning, pursuant to M.R. Civ. P. 52(a), moved for findings of fact and conclusions of law concerning the court's April 18, 2013, amended order, and submitted eight proposed findings. The Bank opposed the motion for further findings.

• 6/3/13: The court ordered the parties “to file simultaneously proposed findings of fact and conclusions of law within 21 days.” Manning, citing for support the affidavits that he and his attorney had filed in opposing the Bank's February 14, 2013, motion for reconsideration, responded with fifty proposed findings. The Bank filed twenty-one proposed findings and conclusions.

• 9/19/13: The court, without holding a hearing, entered the following order:

After reviewing the competing proposed findings of fact, the court adopts [Manning's] proposed findings and incorporates [the Bank's] findings # 4, 5, 7, 8, 11. [The Bank] has failed to address the allegations regarding scheduling of a deposition and correspondence regarding incomplete discovery. Accordingly, the 4/18/13 order is vacated and the 2/1/13 order is reinstated. Case dismissed with prejudice.

[¶ 4] The Bank filed a notice of appeal. Manning filed a motion to strike section two of the Bank's reply brief; we ordered that the motion be considered with the merits of the appeal. We now deny the motion to strike and reach the merits of the parties' arguments.

II. DISCUSSION

[¶ 5] To address the issues raised on appeal, we examine the court's key actions in their chronological order.

A. The November 9, 2012, Order Imposing a Discovery Sanction

[¶ 6] On November 7, 2012, Manning wrote to the court to request a hearing “pursuant to [M.R. Civ. P.] 26(g)(1) ... regarding an ongoing discovery dispute.” Manning advised the court that he sought an order compelling discovery, and “the attorney[ ] fees expended in trying to get the [Bank] to comply with its discovery obligations.”

[¶ 7] Two days later, without holding a hearing, the court responded to the letter with an order that provided, in part:

Pursuant to the provisions of M.R. Civ. P. 37(a)(2), it is ORDERED and ADJUDGED, as follows:

1. That the [Bank] file and serve answers to the interrogatories upon opposing counsel on or before November 30, 2012.

1a. That the [Bank] respond in full to the request [for discovery] and serve the response upon opposing counsel on or before November 30, 2012.

2. That the [Bank] pay to [Manning] reasonable expenses in the amount of $150 within 30 days.

3. That service of this order be made by the clerk of this court by mailing attested copies to counsel of record.

4. Failure to comply with this order will result in a dismissal with prejudice of the complaint.

The court's eventual dismissal of the Bank's complaint with prejudice, subsequent amendment to a dismissal without prejudice, and ultimate reinstatement of the dismissal with prejudice, all flowed from that order, specifically the provision imposing a $150 discovery sanction.

[¶ 8] Maine Rule of Civil Procedure 26(g), invoked by Manning to request a hearing on the parties' discovery dispute, provides, in part, that

[n]o written motions under Rule ... 37 [concerning orders compelling discovery and sanctions] shall be filed without the prior approval of a justice or judge of the court in which the action is pending. The moving party shall first confer with the opposing party in a good faith effort to resolve by agreement the issues in dispute. If the dispute is not resolved by agreement, the moving party shall request a hearing from the clerk by letter.

....

The court may issue an order without a hearing if the request is based on a failure to either answer or object to outstanding discovery requests.

M.R. Civ. P. 26(g)(1)-(2). The Bank's alleged failure to respond to outstanding discovery requests was the basis for Manning's letter, and so the court did not err in issuing an order compelling discovery without first holding a hearing.¹

[¶ 9] The court's order did more than simply compel discovery, however. Two days after Manning requested a hearing, the order imposed a $150 sanction on the Bank without a hearing, or any other intervening event, actually taking place. Rule 37(a), cited by the court as the authority for its order, requires a hearing before a monetary sanction is imposed on a party:

If the motion [for an order compelling discovery] is granted, the court shall, after opportunity for hearing, require the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in obtaining the order, including attorney fees, unless the court finds that the opposition to the motion was substantially justified or that...