United States v. Harriman

• Decision Date: 02 November 2010
• Docket Number: No. CV–09–348–B–W.,CV–09–348–B–W.
• Citation: 851 F.Supp.2d 190
• Parties: UNITED STATES of America, Plaintiff, v. Gregory A. HARRIMAN, Defendant.
• Court: U.S. District Court — District of Maine

851 F.Supp.2d 190

UNITED STATES of America, Plaintiff,

v.Gregory A. HARRIMAN, Defendant.

No. CV–09–348–B–W.

United States District Court, D. Maine.

Nov. 2, 2010.

Evan J. Roth, U.S. Attorney's Office, Portland, ME, for Plaintiff.

Gregory A. Harriman, Troy, ME, pro se.

Kathryn P. Harriman, Troy, ME, pro se.

ORDER ON MOTION TO AMEND JUDGMENT OF FORECLOSURE AND ON MOTION FOR RELIEF FROM JUDGMENT

JOHN A. WOODCOCK, JR., Chief Judge.

Concluding that the mortgagee inadvertently failed to comply with the public notice provisions of its earlier foreclosure judgment, the Court grants the mortgagee's motion to amend the foreclosure judgment to void the public sale and to provide for a new period of public notice and sale, and the Court denies the mortgagors' motion for relief from judgment pursuant to Federal Rule of Civil Procedure 60(b), seeking to void the entire Foreclosure Judgment. Applying Maine law, the Court concludes that once the redemptive period has run, errors in the sales process do not constitute grounds for voiding the foreclosure judgment and that equity requires the time periods for advertising and holding the public sale be reset.

I. STATEMENT OF FACTSA. The Foreclosure Action Leading to Judgment

On August 4, 2009, the United States of America filed a complaint for foreclosure against Gregory A. Harriman and Kathryn P. Harriman, alleging that: 1) on April 23, 1991, the Harrimans obtained a loan from the United States Department of Agriculture in the amount of Sixty Two Thousand Dollars ($62,000.00), as evidenced by a promissory note secured by a real estate mortgage involving land in Unity, county of Waldo, state of Maine; 2) that they had failed to comply with the conditions of payment; and 3) that the United States was entitled to a foreclosure of the Unity property.¹Compl. (Docket # 1). On September 1, 2009, the Harrimans answered the Complaint and counterclaimed against the United States. Ans. and Countercl. (Docket # 8). On January 5, 2010, the United States moved for summary judgment against the Harrimans. Mot. for Summ. J. (Docket # 17). The Harrimans did not respond and on February 3, 2010, the Court entered Judgment against them. J. of Foreclosure and Sale (Docket # 21) ( J.).

B. Post–Judgment Developments

The Judgment of Foreclosure and Sale fixed an amount due from the Harrimans to the United States under the terms of the mortgage and provided that if they did not pay the United States “the amount adjudged to be due herein within 90 days from the date of this Order,” a representative of the United States “shall sell the mortgaged premises in one parcel or in separate parcels at public sale pursuant to the requirements of 28 U.S.C. Section 2002, 14 M.R.S.A. Sections 6323, 6324, and this judgment.” Id. at 2. The Judgment also provided:

Notice of said sale shall be given by publishing a Notice of Sale, in a newspaper of general circulation in Waldo County, Maine, once a week for four (4) weeks. Such notice will not be published until after the expiration of the redemption period, but not later than 90 days after the expiration of the redemption period. This sale shall be held not less than thirty (30) days nor more than forty-five (45) days from the date of first publication.

Id.

The Government says that after the Foreclosure Judgment issued, the “redemption period expired on May 4, 2010.” Mot. to Am. J. of Foreclosure and Sale Nunc Pro Tunc at 1 (Docket # 23) ( Gov't's Mot.). The public sale was scheduled for July 2, 2010, and in accordance with the Foreclosure Judgment, the United States requested that the Republican Journal publish the notice of public sale for four weeks: June 2, June 9, June 16, and June 23, 2010. Id. The foreclosure sale was held on July 2, 2010, at the Probate Courtroom in Belfast, Maine, and the highest bidders were the Defendants. Id. After the sale, however, the United States discovered that the Republican Journal had only published the Notice of Foreclosure Sale three times, not the required four. Id. at 2.

C. The United States' Motion and the Harrimans' Opposition and Motion

Because of the defect in publicizing the sale, on September 1, 2010, the United States moved to amend the judgment and sale nunc pro tunc and to republish a Second Amended Notice of Foreclosure Sale more than ninety days after the expiration of the redemptive period. Id. On September 9, 2010, the Harrimans objected to the United States' motion to amend and moved for relief from the February 3, 2010, judgment. Gregory and Kathryn Harriman's Ob. to Pl.'s Mot. to Amend J. of Foreclosure and Sale Nunc Pro Tunc and Mot. for Relief from J. of Foreclosure and Sale (Docket # 24) ( Defs.' Ob. and Mot.). On September 22, 2010, the United States replied to the Harrimans' objection to its motion and on September 23, 2010, the United States responded to the Harrimans' motion. United States' Reply to Defs.' Ob. to the Mot. to Am. J. (Docket # 26) ( Gov't's Reply ); United States' Rep. in Opp'n to the Defs.' Mot. for Relief from J. (Docket # 27) ( Gov't's Opp'n ).

D. The Parties' Positions

In its first motion, the United States simply recited the facts surrounding the publication error in June 2010, and asked the Court to amend the original Judgment and Foreclosure Sale dated February 3, 2010, nunc pro tunc to allow for publicationof a Second Amended Notice of Foreclosure Sale beyond the ninety day period provided in the Judgment. Gov't's Mot. at 1–2.

The Harrimans objected and moved for relief from judgment. Defs.' Ob. and Mot. at 2. The Harrimans quote 14 M.R.S. § 6323, which provides in part that “the first publication [is] to be made not more than 90 days after the expiration of the period of redemption.” Id. at 1. Citing The Cadle Co. v. LCM Associates, 2000 ME 73, ¶ 7, 749 A.2d 150, 152, they assert that “this Court has no power to amend the statute.” Id. at 1–2. They contend that, to effect a legal foreclosure, the mortgagee must strictly follow all the steps required by statute and that the United States' failure to do so in this case must render the Foreclosure Judgment void. Id. at 2 (citing Winter v. Casco Bank and Trust Co., 396 A.2d 1020, 1022–24 (Me.1979) and Stafford v. Morse, 97 Me. 222, 223, 54 A. 397 (1902)).

The United States filed two responses. First, it contends that the Harrimans' argument fails to distinguish between the Foreclosure Judgment, which it describes as “unassailable”, and the method of sale, which it says was “an inadvertent newspaper error.” Gov't's Reply at 2. To support its distinction, the United States cites KeyBank National Association v. Sargent, 2000 ME 153, ¶ 34, 758 A.2d 528.Gov't's Reply at 2. The United States also contends that in Cadle, the Maine Supreme Judicial Court vacated the deficiency, but not the foreclosure itself. Id. at 3.

Second, the United States urges the Court to deny the Harrimans' motion for relief from judgment on the ground that they have failed to sustain their burden of proving exceptional circumstances to set aside a foreclosure judgment under Rule 60. Gov't's Opp'n at 3. It further argues that the Harrimans waived any right to contest the foreclosure judgment by failing to object to the Government's motion for summary judgment. Id.

II. DISCUSSIONA. The Effect of Errors in the Notice of Public Sale of Foreclosed Property

In KeyBank, the Maine Supreme Judicial Court resolved the Harrimans' argument that the Foreclosure Judgment is void because the public sale provisions were not followed.²2000 ME 153, ¶¶ 34–39, 758 A.2d at 537–38. In KeyBank, after the ninety day redemptive period expired, the mortgagee published the notices of public sale with a photograph of a house different than the mortgagor's house. Id. ¶ 34, 758 A.2d at 537. Just as the Harrimans claim now, the mortgagor in KeyBank contended that the bank had to “begin the entire foreclosure process anew.” Id. The Maine Law Court disagreed:

The notice of public sale was published after the redemption period expired. After the redemption period expires, “all rights of the mortgagor to possession terminate.” See 14 M.R.S.A. § 6323(1) (Supp.1999). Accordingly, any error in the sale process should not serve as grounds to set aside the foreclosure judgment itself. The “strict compliance” doctrine is limited to those procedures leading to the foreclosure judgment.Id. ¶ 38, 758 A.2d at 537–38 (citing Winter, 396 A.2d at 1024, and Stafford, 97 Me. at 223–25, 54 A. at 398). The KeyBank Court further explained that Stafford and Winter—both cited by the Harrimans for support—“stand for the proposition that technical errors in procuring a judgment of foreclosure may render that judgment void.” Id. ¶ 37, 758 A.2d at 537. However, those cases did not allow, as the Harrimans contend, for a post-judgment error to void a defect-free judgment. Id. Thus, under KeyBank, once the ninety day redemptive period expired in this case, any error by the United States in the timing of the public notices cannot be grounds to set aside the foreclosure judgment itself.

If a mortgagee has failed to comply with the public sale provisions of the law, the KeyBank Court clarified that “the proper analysis for the trial court is whether it would be equitable to set aside the sale given the procedures that were employed by the mortgagee.” Id. ¶ 38, 758 A.2d at 538. Here, the United States asks the Court to allow it to hold another public sale and to re-advertise the sale, this time in accordance with the directive of the Foreclosure Judgment, but beyond the ninety day period allowed by the Judgment.³

The equities weigh in favor of the United States. Once the redemption period expired, the United States became the legal owner of the property and the purpose of the time periods is to benefit the mortgagors to assure that the public sale is as open and competitive as possible. In Cadle, the Maine Supreme Judicial Court explained the purpose of the statutory time period between notice and public sale:

The time...