JJ6-J2 STATE OF MAINE SUPERIOR COURT PISCATAQUIS, ss. CIVIL ACTION DOCKET NO. CV-97-20
RICHARD ANNUNZIATO, et al.,
Plaintiffs
v. ORDER
T-M CORPORATION, et al.,
Defendants.
This litigation originally concerned certain rights and liabilities of owners and
developers of the Kineo peninsula and Rockwood dock areas of Moosehead Lake. It
began in 1997 when two landowners, Richard and Kathleen Annunziata, filed a five
count complaint against the Kineo developer, T-M Corporation ("T-M"), individuals
associated with the corporation, the owners association,· and several other Kineo
landowners. The complaint prompted the defendants to file a variety of counterclaims,
cross-claims, and third party complaints. The Court decided many of the issues that
were raised by these pleadings by partial summary judgment orders and eventually
decided most of the remaining issues, after trial, by Order dated May 9, 2005. The case
then remained inactive for a period of time until September 25, 2007, when the Mitchell
cross-claimants filed a motion to determine future proceedings. The Court then issued
an order requiring T-M to indicate whether it had any unresolved claims in the
litigation. After receiving T-M's response, the Court conducted further proceedings to
resolve all remaining claims.
On March 22-24, 2011, the Court conducted a trial in this matter, and heard
evidence on four separate issues: (1) the cross-claim of James ~ ~ ~ci&. Filed against T-M for a portion of "net profits" from the sale of common land .ased2omfllieir
1 Piscataquis County Cl~rk S · .rfflc8 3 1988 agreement (Cross-Claimants' Ex. F-2); (2) the Mitchells' cross-claim related to a
provision in that agreement requiring T-M to perform certain work on the Mitchell lots;
(3) T-M' s counterclaim against the Annunziatos for business defamation and slander of
title; and (4) T-M's counterclaim against the Annunziatos for foreclosure based on their
alleged failure to pay association assessments. The Court received evidence on all issues
except for the foreclosure claiin, deferring hearing on that claim until it decided the
Annunziatos' motion for judgment as a matter of law on that count. It was decided at
the time that there would be no further hearing if the motion were granted, but further
hearing would be required if the motion were denied.
I. MITCHELL CROSS-CLAIMS
In March of 1988, T-M purchased a large tract of land bordering Moosehead Lake
consisting of a peninsula upon which a grand hotel had once been located, as well as a
dock and surrounding land in Rockwood, the customary point of access to the
peninsula. On a portion of the property there existed a forty-eight-lot subdivision
already approved by the Land Use Regulatory Commission ("LURC"). Remaining on
the peninsula were some structures that had been appurtenant to the hotel, but they
had been neglected and were in a state of disrepair. A golf course was also located on
the peninsula, but it had not been recently maintained. Approximately ten of the forty
eight lots had already been sold at the time of T-M's purchase, and most of the
remaining land was designated as common land or occupied by the golf course. Most
of the initial litigation concerned the rights of the landowners and developers to the use,
sale, or development of the common land.
James E. Mitchell and Elizabeth H. Mitchell were the record owners of Lots 10
and 11 in the subdivision prior to T-M's purchase of the Kineo property. After T-M's
purchase, Gary Merrill, the president of T-M, desiring to cause its relationship with the
2 Mitchells and other original owners to be identical to its relationship with future
purchasers vis-a-vis the enforceability of restrictions and covenants (including rights to
the common land), negotiated with the Mitchells a deed swap, which required the
Mitchells (the original owners) to relinquish their rights under the original subdivision
plan and become subject to a new Declaration of Covenants and Restrictions. As a part
of this negotiation, T-M and the Mitchells entered into anagreement in which the
Mitchells relinquished their pre-existing rights to the "common land" designated in the
original subdivision plan. (cross-claimants' ex. F-2) In exchange, T-M agreed to: (1) pay
the Mitchells one-twentieth of all net profits made on the sale or development of the
common lands, and (2) install, at the Mitchell's request and T-M's expense, driveways
on the Mitchell lots (10 and 19), clear and clean up those lots, and install, at the
Mitchell's request and T-M's expense, septic systems on the lots in accordance with
LURC permits, provided that the Mitchells pay for the cost of all materials necessary for
the installation. These two provisions are the subject of the cross-claims that the Court
now addresses.
A. NET PROFITS DUE
T-M sold parcels of common land after making the 1989 agreement. In 1994, the
company sold the golf course for approximately $100,000 and paid the Mitchells 5% of
the profit from the land portion of the sale. 1 The company sold the Rockwood portion of
the common land upon which the dock was located for $250,000 in 1990, and in 1998 it
sold a portion of the common land called the "hillside" for $100,000. T-M did not pay
any sums to the Mitchells reflective of either of these sales. Additionally, T-M conveyed
its remaining common land-described as Lot 65 and comprised of, most importantly,
"the shorefront," a narrow strip comprising most of the shorefront involved in the
1 The Mitchells are making no claim related to this transaction.
3 development-to the Kineo Community Owners Association in 1998, receiving no
direct monetary proceeds from the conveyance. The strip was over 4,000 feet long and
generally followed the perimeter of the development, between the lots and the shore of
the lake, and the tax-assessed value of the parcel at the time of the conveyance was
$388,200. The Mitchells assert that they should be awarded 5% of a sum comprised of
the $350,000 in proceeds plus the $388,200 assessed value of the shorefront lot. T-M and
Merrill assert there were no net profits from these conveyances.
The concept of "net profit" as applied to the facts of this case is not easily
defined. The term is not defined in the agreement, and no accountants, appraisers or
similar experts testified at trial. In the absence of such guidance in ascertaining an
appropriate definition, the Court adopts a generic definition: "total sales revenue less
the cost of goods sold and all additional expenses." Black's Law Dictionary 1329 (9th ed.
2009). The Court will attempt to apply this definition to the facts of this case in order to
determine the net profit derived from the sale/ conveyance of common land. The Court
will first determine what revenue was generated from sales and then evaluate cost and
related expense.
1. Determining Net Profit from Revenue and Cost Calculation for
Each Parcel
a. Revenue Derived from Sale
First, the Court turns to an analysis of T-M's proceeds from the sale of common
lands. Clearly, it gained $350,000 from the sale of the hillside and Rockwood properties.
It is less clear whether T-M received any sales revenue from its conveyance of the back
land and shorefront strip. To begin the analysis, the Court will attempt to evaluate the
value of the benefit to T-M. The Mitchells assert that the benefit is equal to the value of
the property. Even if the Court accepted this proposition, it is not convinced that the fair
4 market value of the property is equal to its assessed value. To the contrary, a variety of
factors, such as market forces and the availability of a buyer, can affect what a seller
receives. Although Mr. Merrill opined that the property was very valuable in his
deposition, the Court does not necessarily agree. The subdivision plan did not permit
development of the narrow strip of shorefront. The potential buyers who would be
most interested in this land would be the owners association, or perhaps individual
owners or groups of individual owners, the very people with whom T-M had been
involved in expensive litigation of uncertain outcome. A purchaser would also be
required to pay the expensive property taxes related to the property, a motivating factor
in T-M's decision to convey it. The Court was not provided with any evidence
concerning how the assessed value was ascertained and it seriously doubts that the fair
market value of the shorefront and back land was equal to its assessed value.
Additionally, there is no reliable method that can be used in valuing the benefit
conferred upon T-M by the settlement. Although T-M obviously thought it was
receiving a benefit in the conveyance, it is difficult to quantify the benefit because it is
dependent on the potential outcome of the litigation had there been no settlement, a
factor that is obviously unknown. Although the result would arguably be different
different if T-M had sold or conveyed the property for less than market value to avoid
or minimize its payment to cross-claimants, this conveyance was a logical effort to
reduce litigation expense and avoid a potentially adverse outcome in the litigation.
Most fatal to the claim that the proceeds were $388,200, however, is the fact that
the 1988 agreement does not provide support for this conclusion because the agreement
refers to "net profit on the sale or development of the common lands." There is no
reference to a non-cash conveyance and there is no provision that gives assessed value a
role in the computation. Based on the facts presented here, the Court discerns no
5 authority for imputing assessed value as sales proceeds related to this conveyance. The
contract did not guarantee that cross-claimants would receive a minimum value for
each conveyance of common land, but only that they would receive the net profit
related to the actual sales revenue that was generated. Based on this analysis, the Court
concludes that T-M's gross sales proceeds from the common land sales is limited to
$350,000.
b. Cost of Common Land and Related Expense
Relevant records, such as relevant tax returns that may have shown profits or
losses related to specific sales, or contained information relevant to the determination of
cost and expense, were not admitted. 2 There has been no attempt to assign a specific
value or cost at the time of T-M's purchase to any lot that T-M later sold, or to a specific
portion of the common land, or to any other property such as the golf course or the
Breakwater Clubhouse. It is not possible, on the state of the evidence, to assign an
original value or cost to T-M for any specific property that T-M later sold. Additionally,
it is not possible to adjust that original cost by adding legitimate business expense
directly or indirectly related to a particular parcel, and then subtract that adjusted cost
from its the sale price to arrive at a net profit. Because of this, the Court will abandon a
parcel-by-parcel approach, and instead will attempt to determine T-M's approximate
investment in the overall project, determine its overall sales proceeds for the project,
and, if there is a "net profit," somehow apportion part of it to the common land.
2. Overall Cost to T-M and Overall Sales
T-M bought the property in 1988 for $2,250,000. Mr. Merrill testified that the
company borrowed $3,100,000 to not only purchase the property, but also to improve
2T-M claims that it furnished all of the tax returns that it possessed in discovery. The Court has been provided no information to the contrary.
6 the property and its infrastructure. The company, intending to implement the basic
development already approved by LURC, spent large sums to improve the golf course
that had not been maintained, even installing new greens. The company paid for
improvements to the Rockwood portion of the property, painting and repairing existing
structures, and installing underground storage tanks. It also paid for improvements to
the exterior of the cottages it owned on the peninsula, and for landscaping. T-M spent
sums to try to establish an access road to the property via a paper company road and to
tear down the hotel annex and haul away the remains. Perhaps most importantly, it
paid to install over three miles of underground power and telephone cable, and to
upgrade existing roads in the development. Finally, it incurred attorney fees during the
extended litigation encountered in developing this subdivision. The Court finds that
making all of these improvements must have cost a substantial sum, consistent with the
overall amount borrowed, and believes the testimony that T-M spent at least $3,100,000
to purchase and improve the property.
The parties presented specific evidence concerning the proceeds of T-M' s sale of
Kineo subdivision lots and properties. Testimony reveals that sales of real estate in this
subdivision, exclusive of common land sales, yielded $2,406,500 to T-M. Additionally,
T-M gained a total of approximately $450,000 from its sale of the Rockwood, hillside,
and golf course properties. Even if the Court were required to characterize the benefit
associated with the shorefront conveyance as sales proceeds, it cannot find that the
value thus ascertained approached the assessed value.
3. Net Profit Calculation
The Mitchells implicitly argue that there should be no cost or expense attributed
to the common land and that the Court should declare that the entire proceeds is net
) profit. The Court discerns no support for this argument unless it imposes a burden shift
7 in this case and finds that because T-M did not present specific evidence related to cost
and expense for each parcel of common land, it had no cost or expense. 3 The Court has
reviewed the case law that allegedly provides support for requiring that cross-claim
defendant have the burden of proving cost and expense related to the sale of common
land. In Patten v. Milam, 480 A.2d 774, 776 (Me. 1984), the Court required that a medical
malpractice defendant prove that he was in this state rather than require that the
plaintiff prove that defendant was in another state, for purposes of determining
whether the statute of limitations was tolled. The Court's reasoning was based of the
proposition that the facts relevant to that analysis were "peculiarly within the
knowledge of the defendant." Id. In Jacobs v. Jacobs, 507 A.2d 596,602 & n.5 (Me. 1986),
the Court intimated in a footnote that the doctrine could possibly be applied to require
a spousal support payee to prove lack of cohabitation when the payor was claiming that
support should terminate because the payee was cohabitating.
This Court will not adopt the doctrine here because there is ample evidence of T
M' s overall cost and sales, and it is obvious that T-M spent substantial sums on
legitimate improvements to the development, although the evidence is insufficient to
assign cost and expense values to specific lots or parcels. Furthermore, the cross
claimants could have done more to obtain information relevant to cost basis on its own,
in the form of expert testimony to apportion initial purchase cost among the lots and
parcels that were eventually sold, including the common lands. Additionally, the
passage of time while this case was dormant would have had the natural effect of
increasing the likelihood that either side could be missing documents at the time of
3 Cross-claimants also argue that no improvement expense was incurred to improve the common lands.
This statement is not accurate because T-M spent money to improve the Rockwood property. Additionally, the value of the common land is obviously related to its locatl,o.n in a developed subdivision with a golf course, power, and improved roads, and a portion of Lhose osts sh uld be apportioned to the common lands.
8 trial. Under these circumstances, it would be inappropriate for the Court to impose a ( burden shift in this case.
Based on the foregoing analysis, the Court concludes that T-M's proceeds from
the sale of land in this subdivision did not exceed their overall investment of at least
$3,100,000, and that T-M had no net profit as a result of its activities on Kineo and
enjoyed no net profit in its sales of common lands.
B. SUMS DUE FOR CLEARING, DRIVEWAY INSTALLATION, AND
SEPTIC INSTALLATION
According to the 1988 agreement (Cross-Claimants' Ex. F-2), T-M was required to
install driveways and clear and clean up Lots 10 and 19 in accordance with a building
permit issued by LURC, when requested to do so by the lot owner. Also, upon request,
T-M was required to install septic systems in accordance with the permit, but the owner
of the lot was responsible for payment for all materials necessary for installation. In
2004, Mr. Mitchell requested, orally and in writing, that T-M begin clearing and install a
driveway and septic system on Lot 10. Upon T-M's failure to respond, cross-claimants
had the work done and then sought to bill T-M. Having received no compensation, Mr.
Mitchell included this claim in the breach of contract cross-claim. Additionally, the
claim encompasses a theory of anticipatory breach with regard to Lot 19.
Charles Foster performed the clearing and installation on Lot 10, using Ram
Land Development Co. LLC' s equipment. By agreement, Foster operated the equipment
to work off a $2,500 debt he owed to the Mitchells, who were to pay Ram directly for
the use of the equipment. For the purpose of deciding this claim, and consistent with
the testimony of Ram's owner, Mr. Mello, the Court considers gravel as a material that
T-M does not have to provide. The Court makes the following findings concerning the
) expenses that T-M is obligated to pay:
9 (1) Ram invoice 128 includes a charge of $3,604 for septic, but according to the I testimony of Mr. Mello, that amount includes septic system materials that cost $2,000.
The Court classifies the October 21 charge of $900 and the October 22 charge of $540 as
expenses that T-M is required to pay according to the agreement. The Court finds that
the term "graveling" relates to the distribution of gravel, not the cost of the gravel.
Gravel had been stockpiled on Lot 19 prior to this project. The remainder of the charges
on the invoice are not relevant to the agreement.
(2) Ram invoice 136 includes relevant charges of $720, consisting of hauling
gravel and finish grading the driveway.
(3) Ram invoice 112 contains charges of $3,044 that are related to clearing the lot,
a covered expense.
Based on these findings, the total expense that T-M should have paid is $9,324,
including $2,500 for Foster's labor.
Additionally, the cross-claimants assert an anticipatory breach of the agreement
with regard to Lot 19. An anticipatory repudiation of a contract is a party's definite and
equivocal manifestation of intention that the party will not render the promised
performance when the time fixed for it in the contract arrives. The manifestation can be
by words or conduct, but must be definite, unequivocal, and absolute. Wholesale Sand &
Gravel, Inc. v. Decker, 630 A.2d 710, 711 (Me. 1993). The Court does not find anticipatory
breach in this case. The cross-claimants have not requested that work be performed on
Lot 19, have not sited a structure on the lot, and have not informed T-M that they have
obtained any necessary permits. Under these circumstances, T-M could not perform its
obligation under the agreement. The fact that there has been litigation concerning T-M's
obligations with regard to Lot 10 demonstrates that the parties disagree on what
) amounts T-M owes, not that it will refuse to meet its obligations with regard to Lot 19.
10 II. T-M COUNTERCLAIMS
A. SLANDER
In Counterclaims IV-VI, T-M asserts that Richard and Kathleen Annunziata
made statements to others concerning the common lands in the Kineo development in
order to discourage them from purchasing lots in the subdivision. It alleges generally
that they aggressively told prospective buyers of ongoing litigation and made
statements to inform others that they, the Annunziatos, had an ownership interest in
the common land. T-M also alleges that they told Mr. Foster, a prospective buyer of the
Breakwater Clubhouse, that they had an ownership interest in that property in order to
discourage him from purchasing it. It is also claimed that earlier the Annunziatos had
discouraged William Clark from purchasing the Breakwater property because of their
assertions about their ownership of the common lands. T-M also claims that some of
their correspondence with the Department of Conservation is corroborative of the
Annunziatos' slanderous intent.
In Maine, to prove slander of title, the claimant must prove that the defendant
published a slanderous statement disparaging the plaintiff's title to an interest in land;
that the statement was false; that it was made with malice or with reckless disregard of
its falsity; and that the statement caused actual damage. Colquhoun v. Webber, 684 A.2d
405,409 (Me. 1996). 4 To be actionable, an allegedly false statement must be an assertion
of fact and not merely an opinion. Lester v. Powers, 596 A.2d 65, 69 (1991). "The crucial
difference between statement of fact and opinion depends upon whether ordinary
4 The counterclaim pl aintiffs asse rted defamation in Coun t N of their coun terclaim, bu t have only
subm itted ar gument concerning Counts V-V1 of the counterclaim, disparagem ent of property rights and slander of T-M's rea l esta te. It appears that T-M is abandoning any separa te cla im of defamation apart from defamation-type claims affecting real estate.
11 persons hearing or reading the matter complained of would be likely to understand it as
an expression of the speaker's or writer's opinion, or as a statement of existing fact.
Caron v. Bangor Publ'g Co., 470 A.2d 782, 785 (Me. 1984) (quoting Mashburn v. Collins, 355
So. 2d 879, 885 (La. 1977)).
1. General Statements
Mr. Merrill testified that unidentified people told him that the Annunziatos told
them that they, the Annunziatos, had an interest in the Kineo common lands and that
there was litigation concerning the issue.5 Charles Foster testified that he overheard the
Annunziatos make similar statements about their ownership of the common land to
unidentified third parties, and urged them not to buy. Counterclaim plaintiff maintains
that the Annunziatos, who had a business ferrying people to the development, told
potential buyers that they should not purchase land or property in the Kineo
subdivision and generally discouraged them form buying.
The Court finds that the counterclaim defendants told others about the pending
litigation, but made no false statements in this regard because substantial litigation had
been pending for a long while. The Annunzitos also told others that they had an
ownership interest in the common land and made statements to the effect that T-M did
not own the common land, but in doing so were only expressing their opinion on the
topic. This is clear because the statements were made in a context in which the listener
also became aware that there was extended litigation over the issue of the ownership of
the common land. If there was litigation over the common land, then its ownership was
at issue and it is highly probable that the ordinary listener would perceive that the
parties to the litigation, including the Annunziatos, would have nothing but opinions
5This testimony was admitted over a hearsay objection because it was not offered for the truth of the ) matter asserted, but only to prove that something was said.
12 concerning ownership, which had not been resolved. We do not know how the
statements were in fact construed because the testimony was somewhat vague and no
evidence was presented on this specific point.
Additionally, the Annunziatos subjectively believed that they had an ownership
interest in the common land and did not make statements with reckless disregard for
their falsity. In general, most purchasers of a lot in a subdivision containing property
designated as "common land" would not necessarily conclude that the developer was
free to sell it to others for whatever purpose. Additional factors relevant to the
reasonableness of the Annunziatos' belief in this regard include: (1) the applicable
subdivision permit stated that all of the shorefront and much of the interior will be held
in common by the lot owners; (2) numerous lot owners in addition to the Annunziatos
shared the belief that their consent was required before T-M could sell common land;
(3) Mr. Merrill informed lot owners in 1989 that they were all member/ owners of the
golf course; and (4) the final subdivision plan designated such parcels as the shorefront
and hillside area as common land, as did maps and advertising materials that T-M
disseminated. The fact that T-M won a hard-fought legal battle over its ownership of
the common land does not mean that its opponents held their beliefs recklessly.
2. Statements to Clark and Foster
T-M asserts that if the Annunziatos had not made slanderous statements, similar
to those described above, to Mr. Clark, he would have purchased the Breakwater
Clubhouse at a substantially higher price than Charles Foster later paid. Mr. Clark
denies that he made a formal offer, indicates that he only expressed interest in the
property at the price that Foster ultimately paid, and denies that his decision against
buying it had anything to do with comments by the Annunziatos. Because any
comments that the Annunziatos made were expressions of opinion that were not
13 recklessly held, these claims are not actionable. Additionally, the Court believes Mr.
Clark's testimony, and T-M has failed to prove damages even if the outcome on the
issue of liability were different.
Mr. Foster testified that Mrs. Annunziata made general statements to discourage
prospective buyers from purchasing lots, using such terms as "snake oil," "under
litigation," and "smoke and mirrors." He testified that in 1995, Mrs. Annunziata told
him that because she owned an interest in the common land she could come in and sit
at his dinner table if he bought the Breakwater Clubhouse from T-M. He indicated that
she and another lot owner, Mr. Rines, made similar comments to Mr. Foster's wife in a
phone call. He said he perceived the comments to be idle talk. Again, these comments,
although more colorful than others, were nothing more than the expression of an
opinion and they were not made recklessly.
3. Letters
The Annunziatos corresponded with the Department of Conservation on three
occasions. On two occasions they asked that the hillside lot not be purchased as an
acquisition for Land for Maine's Future. Although the Department ultimately removed
the parcel from consideration, these letters were written after Mr. Foster had already
purchased the parcel and no claim of damage could be asserted. The third letter
concludes by asking LURC to investigate any "resulting permits or approvals"
involving T-M activities. This is clearly a writing that expresses a request, not a fact, and
cannot be considered slanderous, and is entirely consistent with the Annunziatos' good
faith belief that T-M should not be able to sell any of the common land.
B. FORECLOSURE
At the close of counterclaim plaintiff's case, the Annunziatos orally moved for
judgment as a matter of law. The Court took the motion under advisement and
14 proceeded to hear evidence on all other issues, and reserved to the parties the right to ' present additional evidence, depending on the Court's ruling on the motion. The Court
will now decide the motion.
In Count II of its counterclaim, T-M seeks a judgment declaring that the
Annunziatos' interest in in their lot, Lot 5, be foreclosed, that the Court enforce its lien
against the lot, and that it be declared the owner of the lot. 6 The lien mentioned in the
complaint was filed in order to collect certain dues that the Annunziatos allegedly
owed. In 1997, T-M attempted to avail itself of the so-called "strict foreclosure"
provisions of 14 M.R.S. § 6203 (2006), repealed by P.L. 2007, ch. 391, § 3 (effective Sept. 20,
2007), to collect what it claimed was owed. It caused a notice of foreclosure to be served
on the Annunziatos, and then recorded the notice in the Piscataquis County Registry of
Deeds to begin the running of the one-year period of redemption. Because they did not
want their property to be subject to the one-year period of redemption, the Annunziatos
initiated a proceeding in Piscataquis County Superior Court in which they sought an
order voiding the one-year period of redemption. When proceeding under this statute,
the party seeking foreclosure must serve the opposing party with a notice of foreclosure
and then record the notice in the appropriate registry of deeds within thirty days of
service. Id. § 6203(2). Because T-M had recorded the notice in the registry forty-five days
from service of the notice, the Court, by Order dated October 9, 1997, ruled that "T-M is
barred from pursuing rights under purported foreclosure other than counterclaim
here."
Counterclaim defendants assert that the foreclosure count should be dismissed
because T-M now alleges the same foreclosure mechanism as it attempted to use in
6Actually, the lot owners had a duty to pay dues to the Kineo Community Owners Association who J assigned the right to collect those dues to T-M.
15 1997. At that time, the Court barred T-M from pursuing foreclosure pursuant to 14 I M.R.S. § 6203, the same statute, they claim, that is the subject of this counterclaim.
Insisting that in order to legally foreclose, all steps mandated by statute must be strictly
performed, see Camden Nat 'l Bank v. Peterson, 2008 ME 85, <_[ 21, 948 A.2d 1251, the
Annunziatos assert that the same recording problem-a failure to record the foreclosure
notice within 30 days-requires the Court to dismiss Count II of the counterclaim. T-M
asserts that the foreclosure count should not be dismissed because, after the ruling of
October 9, 1997, it filed its counterclaim, asserting its right to foreclose against the
Annunziatos' lot based on the provisions of their declarations7 and their failure to pay
dues. It does not argue against the Annunziatos' claim that the late filing is fatal to
foreclosure brought under 14 M.R.S. § 6203, but argues that its foreclosure count
pertains to a judicial foreclosure brought under different statutory provisions, namely
14 M.R.S. § 6321 (2010) .
In Count II of its counterclaim, T-M seeks a judgment declaring and quieting title
to Lot 5, citing 14 M.R.S. §§ 5951-5963 (2010) (declaratory judgments), 14 M.R.S. § 6651
(2010) (quiet title), and M.R. Civ. P. BOA. It alleges that its assignee, Kineo Community
Owners Association, 8 served and duly recorded the "notice of foreclosure of lien" and
states that the one year period of redemption has expired without any action on the part
of counterclaim defendants to redeem the property, citing 14 M.R.S.A. §§ 6203, 6204
(2006), repealed by P.L. 2007, ch. 391, §§ 3-4 (effective Sept. 20, 2007). It specifically alleges
that by virtue of 14 M.R.S.A. § 6204, the Annunziatos' right of redemption has been
7 Referenced is the "Declaration of Covenants and Restrictions Kineo and Rockwood, Maine," dated May 1, 1989, and recorded in Book 723, Page 51 at the Piscataquis Coun ty Registry of Deeds. 8 Apparently the serving and record ing was accomp lis hed by this entity. T-M's right to bring this claim as
assignee has not been challenged.
16 forever foreclosed. It prays for a judgment declaring that the Annunziatos' interest in
Lot 5 has been foreclosed, that the lien is valid, and that T-M is the owner.
Although the Court in 1997 envisioned that T-M could file a counterclaim
alleging foreclosure, it did not dictate how that was to be alleged. It is clear to this Court
that the counterclaim plaintiff chose a hybridized version of strict foreclosure to
accomplish its goals, by combining concepts of declaratory judgment and quiet title
with concepts of foreclosure as defined in 14 M.R.S. §§ 6203, 6204. Not only does T-M
fail to mention the "judicial foreclosure" statute, 14 M.R.S. 6321, or any of its provisions,
but in Count II it clearly seeks title to the property, relief not authorized by the latter
statute. If the plaintiff prevails in "judicial foreclosure," it is not awarded title to the
property foreclosed upon, but is granted the right to sell the property and apply the
proceeds of sale to the debt, an entirely different species of foreclosure. Because of the
differences between the two statutes, foreclosure by civil action under 14 M.R.S. §§
6321-6325 (2010) is an alternative method to the foreclosure process that is provided in
14 M.R.S. §§ 6201-6203, 6204 (2006), repealed by P.L. 2007, ch. 391, §§ 1-4 (effective Sept.
20, 2007). See U.S. Dep't of Haus. & Urban Dev. v. Union Mortg. Co., 661 A.2d 163, 165 (Me.
1995). Because the two different forms of foreclosure are fundamentally different,
counterclaim plaintiff has, in fact, not proceeded pursuant to 14 M.R.S. § 6321, and has
failed to follow the statutory requirements of the form that it chose to allege, the
counterclaim defendants' motion for judgment as a matter of law is granted.
The Entry Is:
Judgment for cross-claim plaintiffs Mitchell on Count I of their cross-claim and
against cross-claim defendant T-M Corporation, in the amount of $9,324 plus interest
and costs.
17 Judgment for counterclaim defendants Annunziato on Counts II, IV, V, and VI of
counterclaim plaintiff T-M's counterclaims.
/} . ///;/ Dated: December 7, 2011 Ji'A &:~---- WILLIAM ANDERSON JUSTICE, SUPERIOR COURT