J.P. Morgan Mortgage Acquisition Corp. v. Camille J. Moulton , 2024 ME 13 ( 2024 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2024 ME 13Docket: Oxf-21-412
Argued: November 1, 2022
Decided: January 30, 2024
Panel: STANFILL, C.J., and MEAD, JABAR, HORTON, CONNORS, and LAWRENCE, JJ., and
HUMPHREY, A.R.J.
Majority: STANFILL, C.J., and JABAR, HORTON, CONNORS, and LAWRENCE, JJ.
Dissent: MEAD, J., and HUMPHREY, A.R.J.
J.P. MORGAN MORTGAGE ACQUISITION CORP.
v.
CAMILLE J. MOULTON
JABAR, J.
[¶1] J.P. Morgan Mortgage Acquisition Corp. appeals from a decision of
the District Court (South Paris, Ham-Thompson, J.) granting Camille J. Moulton’s
motion for summary judgment on the ground that J.P. Morgan’s notice of
Moulton’s right to cure did not meet the requirements of 14 M.R.S. § 6111
(2023). We affirm the court’s conclusion regarding the defective notice but,
consistent with our decision in Finch v. U.S. Bank, N.A., 2024 ME 2, --- A.3d ---,
we vacate the portion of the judgment requiring J.P. Morgan to discharge the
mortgage.
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I. BACKGROUND
[¶2] The following facts are supported by the summary judgment record
and presented in the light most favorable to J.P. Morgan as the nonprevailing
party. Lubar v. Connelly, 2014 ME 17, ¶ 4, 86 A.3d 642.
[¶3] Moulton owns real estate in Buckfield subject to a March 18, 2009,
mortgage, which secured payment of a $62,985 note. The real estate is
Moulton’s residence. The mortgage was executed in favor of Taylor, Bean
& Whitaker Mortgage Corp. and was assigned to J.P. Morgan on March 21, 2018.
Under the terms of the mortgage, when Moulton made a partial mortgage
payment, the monthly payment would remain outstanding and the partial
payment would be held in a suspense balance as a credit against the loan. The
suspense balance would be applied as a payment only when it was enough to
constitute a full payment, at which point it would be applied to the earliest
outstanding monthly payment.
[¶4] After writing a check dated November 18, 2016, for $720.00,
Moulton ceased making payments on the loan. The monthly payment due was
$742.54. At that point, Moulton had an existing suspense balance from prior
partial payments. Pursuant to the terms of the loan, $47.62 of the
November 18, 2016, payment was added to the suspense balance to make a full
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payment for the oldest outstanding payment due, and the remaining amount of
the November 18 payment ($672.38) was held as a credit in suspense.
[¶5] J.P. Morgan sent Moulton a notice of default and right to cure on
November 22, 2018. When the notice was sent, the loan was in default for
failure to pay from October 2016 through November 2018. The notice provided
that “the total amount to cure the default is $20,930.04,” but also directed
Moulton to “refer to the attached Exhibit A for the itemized breakdown of the
total amount due.” Exhibit A’s itemized breakdown indicated $20,257.66 as the
total amount due following the application of the $672.38 that the bank had
been holding in suspense.
[¶6] On January 24, 2019, J.P. Morgan filed a complaint for foreclosure in
District Court. See 14 M.R.S. § 6321 (2023). Moulton answered and requested
mediation. Mediation was unsuccessful, and the matter was returned to the
docket on August 21, 2019. Prior to trial, the case was continued due to the
foreclosure moratorium under the CARES Act. See Coronavirus Aid, Relief, and
Economic Security Act, Pub. L. No. 116-136, § 4022(c)(2), 134 Stat. 281, 491
(2020). On August 23, 2021, J.P. Morgan filed a motion to dismiss its complaint
without prejudice pursuant to M.R. Civ. P. 41(a)(2). On September 13, Moulton
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filed an opposition to the motion to dismiss and a motion for summary
judgment. J.P. Morgan opposed the motion for summary judgment.
[¶7] On November 24, 2021, the court denied J.P. Morgan’s motion to
dismiss. The court granted Moulton’s motion for summary judgment on the
ground that the right-to-cure notice was deficient because it failed to clearly
inform Moulton of the amount that she was required to pay to cure the default,
and thus Moulton was entitled to judgment as a matter of law. The court went
further, however, and declared that Moulton “holds title to the real property at
issue, unencumbered by the mortgage and promissory note.” The court also
awarded her reasonable attorney fees and costs.
[¶8] J.P. Morgan timely appealed the final judgment.1 M.R. App. P. 2B(c).
II. DISCUSSION
A. Standard of Review
[¶9] We review the trial court’s ruling on a motion 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
1 J.P. Morgan did not raise, and we therefore do not address, any issue regarding the court’s denial
of its motion to dismiss. Nonetheless, we note that such dismissal would be appropriate, especially
in light of Finch, 2024 ME 2, --- A.3d ---.
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issue of material fact and whether [the] party is entitled to a judgment as a
matter of law.” Estate of Frost, 2016 ME 132, ¶ 15, 146 A.3d 118.
[¶10] “A plaintiff seeking a foreclosure judgment must comply strictly
with all steps required by statute.” Bank of Am., N.A. v. Greenleaf, 2014 ME 89,
¶ 18, 96 A.3d 700 (quotation marks omitted). To prevail in a foreclosure action
under 14 M.R.S. § 6321, the plaintiff must prove eight conditions, including
“properly served notice of default and mortgagor’s right to cure in compliance
with statutory requirements.” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700;
14 M.R.S. § 6321 (“The mortgagee shall further certify and provide evidence
that all steps mandated by law to provide notice to the mortgagor pursuant to
section 6111 were strictly performed.”).
B. Notice of Right to Cure
[¶11] The trial court did not err when it determined that the
right-to-cure notice was deficient because it did not clearly put Moulton on
notice of what was required of her to cure the default. See, e.g., Greenleaf, 2014
ME 89, ¶¶ 29-31, 96 A.3d 700 (vacating foreclosure judgment because notice of
default and right to cure specifying an amount to cure the default but also
instructing the mortgagor to contact the mortgagee for an updated
amount-to-cure figure was deficient); JPMorgan Chase Bank, N.A. v. Lowell,
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2017 ME 32, ¶¶ 14-21, 156 A.3d 727 (holding that notice of default providing a
value for late monthly payments and an additional value for “advances” was
insufficient because the mortgagor would have to contact the mortgagee to
determine what the amount to cure was and because the amounts stated
indicated that the mortgagor was uncertain of the amount to cure); U.S. Bank
Trust, N.A. v. Jones, 330 F. Supp. 3d 530, 537-38 (D. Me. 2018) (holding that
notice containing an inaccurately inflated amount-to-cure is deficient when the
mortgagee included an item in the notice that “a reader could have interpreted
. . . as requiring a payment . . . more than that actually required to cure the
borrower’s default”). The notice itself overstated the amount required to cure
the default by $672.38, the amount that J.P. Morgan was holding in suspense.
J.P. Morgan thus failed to make a prima facie showing of strict compliance with
section 6111 and in turn could not prove an essential element of foreclosure.
See Wells Fargo Bank, N.A. v. Girouard, 2015 ME 116, ¶ 11, 123 A.3d 216.
[¶12] In Finch v. U.S. Bank, N.A., we held that where a lender has not
complied with the prerequisites to acceleration under section 6111, a court
cannot conclude that initiation of a foreclosure action nevertheless accelerates
the note balance. 2024 ME 2, ¶ 6, --- A.3d ---. Therefore, when a court enters
summary judgment against a lender or dismisses the lender’s foreclosure claim
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due to a deficient notice of the right to cure under section 6111, the effect of the
judgment or dismissal of the claim is to preclude any future claim for the
outstanding balance due on the note as of the date of the judgment (unless the
lender has asserted a separate claim for the unaccelerated balance due). Id.
¶¶ 51-52. It does not preclude the lender from bringing a future foreclosure
claim based on a future default, nor does it discharge the entire mortgage or
effect a transfer of title. Id. ¶ 52.
[¶13] Although the judgment on the claim for foreclosure based on the
defective notice here is dispositive, we vacate that portion of the trial court’s
judgment “declaring that [Moulton] holds title to the real property at issue,
unencumbered by the mortgage and promissory note” on another ground.
There was no counterclaim for a declaratory judgment and thus no basis for the
court to go beyond entry of the judgment in favor of Moulton by declaring the
effect of its judgment. On a motion for summary judgment, the trial court could
either enter a judgment of foreclosure or enter a judgment in favor of the
defendant on the foreclosure complaint. Courts may not, however, opine on the
effect of a judgment, its enforcement, or other post-judgment matters absent a
specific cognizable claim for declaratory relief.
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[¶14] We do not disturb the trial court’s award of reasonable attorney
fees for defending against the foreclosure claim given the deficient
right-to-cure notice. See id. ¶ 51 (“The court should ordinarily also consider
awarding attorney fees to the borrower pursuant to the applicable statute.”);
14 M.R.S. § 6101 (2023) (“If the mortgagee does not prevail, . . . the court may
order the mortgagee to pay the mortgagor’s reasonable court costs and
attorney’s fees incurred in defending against the foreclosure or any proceeding
within the foreclosure action . . . .”).
III. CONCLUSION
[¶15] Because we agree that the section 6111 notice was defective, we
affirm that portion of the judgment. We vacate the portion of the judgment
ordering discharge of the mortgage, however.
The entry is:
Portion of judgment ordering discharge of the
mortgage is vacated. The remainder of the
judgment is affirmed.
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MEAD, J., with HUMPHREY, A.R.J., joins, dissenting.
[¶16] Although we agree with the Court’s observation that “[t]he trial
court did not err when it determined that the right-to-cure notice was deficient
because it did not clearly put Moulton on notice of what was required of her to
cure the default,” Court’s Opinion ¶ 11, we depart, as we did in the dissenting
opinion in Finch v. U.S. Bank, N.A., 2024 ME 2, ¶ 63, --- A.3d ---, from the Court’s
treatment of the consequences of a flawed notice of right to cure. We would
again conclude that the commencement of a foreclosure action seeking the
entire amount due constitutes an acceleration of the debt, and a judgment of
the trial court finding that the mortgagee has failed to satisfy one or more of the
statutory elements for foreclosure constitutes a final judgment on the merits
and bars relitigation of any matter related to the mortgage.
[¶17] We take this occasion, however, to point out that this case could
and should have been dismissed based upon a threshold issue that is apparent
on the summary judgment record—standing.
[¶18] When a defendant moves for summary judgment, a plaintiff
ordinarily “bears the burden of making out her prima facie case as to every
element.” Boivin v. Somatex, Inc., 2022 ME 44, ¶ 10 n.2, 279 A.3d 393.
Particularly here, where one required element of proof—ownership of the
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mortgage—is necessary to establish the threshold issue of standing, the
obligation of a lender to make out a complete prima facie case is essential. See
Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶¶ 8, 17-18, 96 A.3d 700 (dismissing
a foreclosure complaint for lack of standing for failure to provide proof of
ownership of the note and mortgage and indicating that such proof is a
necessary element). Although a “plaintiff may, in certain instances, satisfy the
burden by putting forth prima facie evidence that establishes a genuine dispute
of material fact as to only those elements that are challenged by a defendant’s
factual or legal argument,” Boivin, 2022 ME 44, ¶ 10 n.2, 279 A.3d 393, this is
not a situation in which that rule should be applied. Cf. Corey v. Norman, Hanson
& DeTroy, 1999 ME 196, ¶ 9, 742 A.2d 933 (concluding that prima facie case as
to elements not challenged by the defendant could be assumed in an attorney
malpractice matter in which the plaintiff’s standing as a client was clear and
undisputed).
[¶19] Here, J.P. Morgan Mortgage Acquisition Corporation, in responding
to Moulton’s motion for summary judgment, failed to demonstrate its
ownership of the mortgage. It relied entirely on Moulton’s statement of
material fact regarding the existence of (1) a purported mortgage assignment
to J.P. Morgan by Mortgage Electronic Registration Systems, Inc. (MERS) and
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(2) a purported quitclaim assignment from “Carrington Mortgage Services, LLC,
as attorney in fact for Government National Mortgage Association for Taylor,
Bean & Whitaker.” As the trial court explained in a footnote in its judgment,
neither of these documents—presented through Moulton’s affidavit “[o]n
information and belief”—established standing for two reasons. See Collins v.
State, 2000 ME 85, ¶ 5, 750 A.2d 1257 (stating that an issue of standing may be
raised by a court sua sponte because it is jurisdictional).
[¶20] First, the attempted assignment by MERS was fatally defective.
The language used in the document is identical to the language in Greenleaf,
2014 ME 89, ¶¶ 12-17, 96 A.3d 700, we deemed insufficient to effectuate an
assignment because MERS, the purported assignor, is a mere nominee for
purposes of recording a mortgage and is not the entity holding the assignable
interest in the mortgage.
[¶21] Second, the purported quitclaim assignment referenced in
J.P. Morgan’s statement of material facts is insufficient to demonstrate standing.
It was executed by a representative of “Carrington Mortgage Services, LLC, as
attorney in fact for Government National Mortgage Association for Taylor, Bean
& Whitaker.” Nothing in any of the statements of material facts or the
referenced exhibits demonstrates the existence or nature of the relationship
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between Taylor, Bean & Whitaker—the original lender—and Government
National Mortgage Association. Nor do any statements or referenced exhibits
demonstrate that Carrington Mortgage Services, LLC, had the power of attorney
to act on behalf of Government National Mortgage Association “for” the original
lender.
[¶22] Rather than dismissing the foreclosure complaint based on the lack
of standing, the trial court here entered a summary judgment. When it did so,
it understood the existing case law to hold that the consequence of its judgment
would be akin to a dismissal with prejudice. See Pushard v. Bank of Am., N.A.,
2017 ME 230, ¶¶ 18-36, 175 A.3d 103; Fed. Nat’l Mortg. Ass’n v. Deschaine,
2017 ME 190, ¶ 37, 170 A.3d 230; see also Bank of N.Y. v. Dyer, 2016 ME 10,
¶ 11, 130 A.3d 966 (noting that a dismissal with prejudice operates as a ruling
on the merits). Deschaine and Pushard have now been overruled, however, see
Finch, 2024 ME 2, ¶ 51, --- A.3d ---, which makes it important for the Court to
clarify the proper procedural response when a plaintiff has not provided proof
of standing.2 See Dyer, 2016 ME 10, ¶ 11, 130 A.3d 966 (stating that a party that
We also disagree with the Court’s holding that a dismissal or summary judgment for the
2
borrower “due to deficient notice of right to cure” under 14 M.R.S. § 6111 (2023) precludes a plaintiff
from bringing “any future claim for the outstanding balance due on the note as of the date of the
judgment (unless the lender has asserted a separate claim for the balance due).” Court’s Opinion ¶ 12
(emphasis added). We continue to regard a summary judgment as a judgment on the merits on the
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lacked standing “never had the rights necessary to get through the courthouse
door and pursue its claim in the first place” (alteration and quotation marks
omitted)). When a party lacks standing, a complaint should be dismissed
because the matter is not properly before the court for consideration on the
merits. See Bank of Am., N.A. v. Greenleaf, 2015 ME 127, ¶ 8, 124 A.3d 1122(“A plaintiff’s lack of standing renders that plaintiff’s complaint
nonjusticiable—i.e., incapable of judicial resolution.”).
full amount due when a lender has accelerated a debt through a foreclosure action, see Finch v.
U.S. Bank, N.A., 2024 ME 2, ¶ 63, --- A.3d --- (Hjelm, A.R.J., dissenting), and we regard such a judgment
on the merits as having a preclusive effect, as explained in the dissenting opinion in Finch:
Not even seven years ago, in two separate but analytically related cases each
decided unanimously, the Court held that a judgment entered against a mortgagee in
a foreclosure action barred successive lawsuits seeking the same relief. See Pushard
v. Bank of Am., N.A., 2017 ME 230, ¶¶ 4, 35-36, 175 A.3d 103 (where the judgment in
the first proceeding was based, in part, on a deficient notice of default); Fed. Nat’l
Mortg. Ass’n v. Deschaine, 2017 ME 190, ¶¶ 7, 37, 170 A.3d 230 (where the prior
judgment was issued as a sanction for the plaintiff’s failure to comply with a pretrial
procedural order). This conclusion is unremarkable because it treats mortgagees like
any other claimant that had already sought relief but was unsuccessful—when a party
loses its case through a final judgment arising from a failure of proof or some other
reason that is dispositive, that party is barred from trying again. See U.S. Bank, N.A. v.
Tannenbaum, 2015 ME 141, ¶¶ 6, 10, 126 A.3d 734. Today, the Court retreats from
that principle. It does not do so because the law emanating from those cases has
become antiquated. It does not do so because the law has changed. Rather, the Court
does so simply because it now disagrees with the outcome of the cases we decided a
short time ago.
2024 ME 2, ¶ 53, --- A.3d --- (Hjelm, A.R.J., dissenting). Here, however, there is no need for the
majority to invoke Finch in any respect. We would not address the merits of the arguments regarding
the adequacy of the notice provided under section 6111 because J.P. Morgan failed to show that it
possesses the necessary interest in the mortgage to support its standing to foreclose, and the matter
should be dismissed.
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[¶23] The summary judgment entered here should therefore be vacated
and the matter remanded for the court to dismiss the complaint for lack of
standing. On remand, the trial court must determine whether the dismissal
should be with or without prejudice. See Green Tree Servicing, LLC v. Cope,
2017 ME 68, ¶ 18, 158 A.3d 931 (“[E]ven when a court is without power to
reach the merits of a complaint because the plaintiff lacks standing, the court is
not divested of its inherent authority to dismiss the complaint with prejudice
as a sanction for misconduct.” (citations omitted)).
William Fogel, Esq. (orally), and Santo Longo, Esq., Bendett & McHugh, P.C.,
Portland, for appellant J.P. Morgan Mortgage Acquisition Corp.
Kendall A. Ricker, Esq. (orally), Boothby, Silver & Ricker, LLC, Turner, for
appellee Camille J. Moulton
Andrea Bopp Stark, Esq., National Consumer Law Center, Boston,
Massachusetts, for amicus curiae National Consumer Law Center
Adam J. Shub, Esq., and Jonathan Mermin, Esq., Preti Flaherty Beliveau &
Pachios LLP, Portland, for amicus curiae Maine Bankers Association
John Michael Ney, Jr., Esq., and Sonia J. Buck, Esq., Brock & Scott PLLC,
Pawtucket, Rhode Island, for amicus curiae USFN — America’s Mortgage
Banking Attorneys
Reneau J. Longoria, Esq., Doonan, Graves & Longoria LLC, Beverly,
Massachusetts, for amicus curiae Doonan, Graves & Longoria LLC
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Frank D’Alessandro, Esq., and Deborah Ibonwa, Esq., Maine Equal Justice,
Augusta, for amicus curiae Maine Equal Justice
Adrianne E. Fouts, Esq., and Amy K. Olfene, Esq., Drummond Woodsum,
Portland, and Marissa I. Delinks, Esq., Hinshaw & Culbertson LLP, Boston,
Massachusetts, for amici curiae The Federal National Mortgage Association and
The Federal Home Loan Mortgage Corporation
Jeremy Kamras, Esq., Arnold & Porter Kaye Scholer LLP, Washington, District
of Columbia, for amicus curiae The Federal Housing Finance Agency
Daniel L. Cummings, Esq., Norman, Hanson & DeTroy, LLC, Portland, for amicus
curiae Maine Credit Union League
Jonathan E. Selkowitz, Esq., Pine Tree Legal Assistance, Inc., Portland, for
amicus curiae Pine Tree Legal Assistance, Inc.
South Paris District Court docket number RE-2019-2
FOR CLERK REFERENCE ONLY