Bank of America, N.A. v. Kelly

• Court: Superior Court of Maine
• Decided: November 24, 2014
• Docket: CUMre-12-197
• Status: Unpublished

Opinion

EN T E RED DEC n ;) 7014 ( - (Aite STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION Docket No. RE-12-197 JA VV-CIAM-11-;!Jl-Pt BANK OF AMERICA, N.A.,

Plaintiff

v. ORDER ON MOTION FOR SANCTIONS GEORGE J. KELLY, JR., STATE OF MAINE __ Defendant. Cumberland. ~- Crerk's Ot6ce NOV 2 4 2014

RECEIVED This matter is before the court on defendant's motion for sanctions.

Defendant argues that plaintiff must be sanctioned for failing to mediate in good

faith as required by the Foreclosure Diversion Program under M.R. Civ. P. 93(j).

For the following reasons, defendant's motion for sancvons is granted.

BACKGROUND

Plaintiff filed its complaint for foreclosure in this case more than two years

ago, on April 13, 2012. Since then, the parties have engaged in multiple

mediation sessions, the most recent of which was held on February 7, 2014. On

that day, after 8 months of mediation, the plaintiff requested an entirely new

financial packet from the defendant, claiming it never received the documents

necessary to process a loan modification. (217 114 Mediator's Report of

Noncompliance.) The mediator found that this conflicted with the plaintiff's

prior representations and issued a report of noncompliance. Defendant requested

sanctions, which the court granted on May 6, 2014. (5 I 6 I 14 Order.)

While defendant's first motion for sanctions was pending, defendant

began resubmitting the requested documents. (1st McKelway Aff.

update and the servicer informed defendant that it could not process the

modification request because the profit and loss statement submitted by

defendant did not have a business name on it. (1st McKelway Aff. '1[ 27.)

Defendant's housing counselor explained that defendant does not have a

business name-he simply uses his own name, but the servicer requested a letter

explaining that he does business under his own name. (1st McKelway Aff. 'li 27.)

Up to that point, defendant had already submitted multiple profit and loss

statements, and plaintiff never objected to their form. (1st McKelway Aff. 'li 28.)

Defendant's housing counselor mailed the letter on June 30 along with an

updated profit and loss statement for the month of May. (1st McKelway Aff. 'li

30.) Defendant filed the motion for sanctions on July 7, 2014.

On August 8, 2014, the loan servicer told defendant's housing counselor

that the only document it needed was a bank statement for July 2014, showing

defendant's monthly social security benefit. (2nd McKelway Aff. 'li 8.) Defendant

had already submitted multiple documents showing his social security income

benefit. (2nd McKelway Aff. 'li 9.) Since August 8, 2014, plaintiff has not notified

defendant that he needed to submit any other documents. At argument on

October 30, 2014, plaintiff's counsel stated that the loan modification request

could not be processed because defendant has failed to submit an up-to-date

profit and loss statement.

DISCUSSION

Under Rule 93(j) and 14 M.R.S. § 6321-A(12) (2013), the court may impose

sanctions on a party for failure to mediate in good faith. Bayview Loan Servicing,

LLC v. Bartlett, 2014 ME 37, 'li 12, 87 A.3d 741. In Bayview, the Law Court

2 identified several factors for the court to consider in imposing sanctions,

including:

(1) the purpose of the specific rule at issue; (2) the party's conduct throughout the proceedings; (3) the party's basis for its failure to comply; (4) prejudice to other parties; and (5) the need for the orderly administration of justice.

Id. "The court should also consider the purpose to be served by imposing

sanctions, including penalizing the noncompliant party and deterring similar

conduct." Id. The court may also consider the effect violations have on the

adverse party. Id. «][ 13. A showing of bad faith or fault is not required for the

court to impose sanctions. Id.

Plaintiff's conduct in this case is unacceptable. Plaintiff has delayed, failed

to communicate with defendant, required defendant to submit multiples of

documents he had already submitted, and still has yet to make a decision on

defendant's request for a loan modification. Although plaintiff may be correct

that the profit and loss statement was not submitted in the correct form, plaintiff

did not timely communicate that information to the defendant and did not take

prompt action when defendant submitted his letter explaining his business

name. Defendant had already submitted multiple profit and loss statements

before June 2014 and plaintiff never objected until defendant's housing counselor

called to find out whether his application was complete.

In considering the required factors, the court first finds that the purpose of

mediation has been frustrated by plaintiff's failure to timely and competently

handle defendant's documents. Second, plaintiff has already been sanctioned in

this case and should have been aware that it needed to process defendant's loan

modification request. Third, plaintiff's explanation, that it did not receive the

3 profit and loss statement in the correct form is not convincing. Defendant has

promptly submitted requested documents and there is no reason that he would

not have submitted the profit and loss document in the correct form had plaintiff

made the request. Fourth, defendant is prejudiced by the continuous delay, the

uncertainty surrounding the status of his loan, and the extra costs and interest

that have and continue to grow. Finally, plaintiff's conduct is also a strain on

limited court resources. Multiple mediation sessions have been held and

continue to be scheduled and rescheduled because plaintiff is unable to process

defendant's application in a timely manner. Accordingly, the following sanctions

are hereby ordered:

1. Plaintiff shall eliminate from defendant's loan account all interest, late fees, property inspection fees, collection fees, default fees and legal fees incurred from the date of the commencement of the foreclosure action through the date the foreclosure action is resolved.

2. The fees must be removed from defendant's account and an updated accounting must be sent to defendant within 30 days of this order.

3. Plaintiff shall pay a penalty to defendant in the amount of $2,500 to deter future violations. This penalty shall be paid to defendant within 30 days of this order.

4. Plaintiff shall pay all of defendant's attorney fees for this foreclosure action since the complaint was filed and until this matter is resolved. Counsel for defendant shall submit an updated attorney fees affidavit with the court at the resolution of this case.

In an effort to timely resolve this case, the court further orders the following:

1. Defendant shall send plaintiff an updated profit and loss statement for all of 2014 within 10 days of the date of this order.

2. Plaintiff shall have 30 days to make a decision on defendant's loan modification request.

3. Plaintiff's failure to comply with this order shall result in dismissal with prejudice.

4 The clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).

J ustice, Superior Court

Plaintiff-Christine Johnson Esq Defendant-Chet Randall Esq \\ PII-Lauren Thomas Esq (TD Banknorth NA)