STATE OF MAINE SUPERIOR COURT PENOBSCOT, ss. CIVIL ACTION DOCKET NO. RE-16-109
BEAL BANK USA,
Plaintiff,
V.
NEW CENTURY MORTGAGE CORPORATION, DECISION
Defendant.
INTRODUCTION
Before the Court is a Motion to Compel Assignment of Mortgage by Plaintiff Beal Bank
USA. On November 28, 2016, Plaintiff filed its initial Complaint to Compel Assignment. Trial
was held on January 10, 2018. On February 16, 2018, Plaintiff filed a Trial Memorandum
arguing that a set of cases from the nineteenth century entitles Plaintiff to judgment in this case.
Plaintiff moves for the Court to compel New Century Mortgage Corporation to assign any
interest it holds in the Mortgage to Plaintiff. For the following reasons, however, the Comi grants
judgment to Defendant.
FACTS
The relevant background underlying the present dispute is derived from Plaintiffs
Complaint and attached exhibits.
Dianah L. Robinson and Ronald C. Robinson received a loan for $53,100.00 and signed a
Note dated September 29, 2006. The Note listed Defendant New Century Mortgage Corporate
("New Century") as the lender. (Pl.'s Ex. 1.) The Robinsons also executed a Mortgage in favor
of Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee of New Century,
1 securing the property located at 755 Airp01t Road, Exeter, Maine 04435 ("Property"). (Pl.'s Ex.
2.)
On December !, 2008, MERS purported to assign the Mortgage to LNV Corporation,
Inc. (Comp!. 1 6; Pl. 's Ex. 3.) On November 9, 2017, LNV Corporation assigned the Mortgage to
Plaintiff. (Pl.'s Ex. 4.)
ANALYSIS
Plaintiff contends that the remedy of compelling an assignment of mortgage is "firmly
rooted" in the law of Maine based on a series of cases from the 1850s. This contention rests on
the premise that the Law Court's more recent decisions regarding the effectiveness of MERS
assignments did not overrule the doctrines on which Plaintiffs argument relies.
The Law Court's ruling in Greenleaf controls the outcome of the present case. The
language of the Mortgage that the Robinsons executed in favor of New Century listed MERS as
"a separate corporation that is acting solely as nominee for Lender and Lender's successors and
assigns." (Pl.'s Ex. 2.) This language exactly matches the language of the mortgage analyzed in
Greenleaf Bank ofAm., NA. v. Greenleaf, 2014 ME 89, 113, 96 A.3d 700. The fact that the
Mortgage in the present case lists MERS as "the mortgagee of record" does not rescue Plaintiffs
claims because the Law Court held that "notwithstanding its reference to MERS as the
'mortgagee of record,' the mortgage in fact granted to MERS 'only the right to record the
mortgage' as the lender's nominee, and 'having only that right, MERS did not qualify as a
mortgagee pursuant to our foreclosure statute."' Id. 114 (quoting Mortg. Elec. Registration Sys.
v. Saunders, 2010 ME 79, 19, 2 A.3d 289). Thus, applying the rulings from Saunders and
Greenleaf to this case, it appears that the December!, 2008 assignment by MERS to LNV
2 Corporation did not effectively assign ownership of the Mortgage to LNV Corporation. Since
LNV Corporation did not have ownership of the Mortgage, it "could not have granted to another
person or entity any greater interest in the mortgage than that enjoyed by" LNV Corporation.
Greenleqf, 2014 ME 89, ,i 16, 96 A.3d 700.
Plaintiff argues that the doctrine of equitable trust entitles Plaintiff to ownership of the
Mortgage despite the Law Comt' s rulings in Saunders and Greenleaf Plaintiff cites Johnson v.
Candage, 31 Me. 28, 31 (1849) for the proposition that "[w]here there is a separation of the note
from the mortgage, the latter continues in force; and by the principles of a comt of equity, the
mortgagee becomes trustee for the holder of the note." Additionally, Plaintiff cites Jordan v.
Cheney, 74 Me. 359,361 (1883), for the proposition that "[o]ne who takes a mo1tgagee's title
holds it in trust for the owner of the debt to secure which the mortgage was given. If a mortgage
is given to secure negotiable promissory notes, and the notes are transferred, the mortgagee and
all claiming under him will hold the mortgaged prope1iy in trust for the holder of the notes."
Plaintiff insists that these cases, among several others that Plaintiff cites in its Trial
Memorandum, support the conclusion that as holder of the Note in this case, Plaintiff is entitled
to ownership of the Mortgage as a trustee; thus, the Court should compel New Century to assign
Plaintiff ownership of the Mortgage.
Plaintiffs argument fails because its reasoning and the cases it cites are inconsistent with
the Law Court's more recent rulings in Saunders and Greenleaf If the equitable trust doctrine
still applied, then the m01tgage-holder would hold the mortgage in equitable trust for the note
holder. See Cheney, 74 Me. 359, 361 (1883). However, if the note-holder was the beneficiary of
an equitable trust that entitled the note-holder to the mortgage, then holding the note would entail
ownership of the mortgage. There would be no separate analyses for holding the note and
3 owning the mortgage because the former would entail the latter. The Greenleaf opinion thus
flatly contradicts the application of the equitable trust doctrine here. See Greenleaf, 2014 ME 89,
112, 96 A.3d 700 ("whereas a plaintiff who merely holds or possesses-but does not necessarily
own-the note satisfies the note pmtion of the standing analysis, the mmtgage portion of the
standing analysis requires the plaintiff to establish ownership of the mortgage."). See also United
States Bank Trust, NA. v. Accredited Home Lenders, CV-15-228, 2017 Me. Super. LEXIS 60, at
*5 (May 2, 2017) ("[t]he court cannot decide here that the holder of the mo1tgage note, as a
transferee of MERS as nominee for defendant mmtgagee, is the owner of the mmtgage as
beneficiary of an equitable trust held by defendant without contradicting the Law Court's
determination in Greenleaf"). If the equitable trust doctrine remained in effect, then the
ineffectiveness of the assignment by MERS would not have necessitated the conclusion that the
plaintiff-bank lacked ownership of the mortgage.
Plaintiff attempts to demonstrate the ongoing vitality of the equitable trust doctrine by
citing to a footnote in the Saunders opinion in which the Law Court cited Averill v. Cone, 129
Me. 9, 149 A. 297 (1930) and Jordan v Cheney, 74 Me. 369 (1883). See Saunders, 2010 ME 79,
1 11 n.3, 2 A.3d 289. The Law Court's citation to these cases, Plaintiff argues, shows that the Law Court has not eliminated the equitable trust doctrine "where the mortgage and note are truly
held by different patties." Id. In Saunders, MERS (the plaintiff in that case) did not hold either
the mortgage or note when it filed its Complaint; the original mortgagee held both the mortgage
and the note. Id. These propositions in Greenleaf, Plaintiff contends, suppo1t Plaintiffs request
for a compelled assignment of mortgage in this case.
Plaintiffs contention that this footnote in Saunders gives the equitable trust doctrine life
would be a legitimate point had the Law Court not rejected it in Greenleaf, in which MERS also
4 purported to assign the mortgage to the plaintiff. Greenleaf, 2014 ME 89, ~ 4, 96 A.3d 700.
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STATE OF MAINE SUPERIOR COURT PENOBSCOT, ss. CIVIL ACTION DOCKET NO. RE-16-109
BEAL BANK USA,
Plaintiff,
V.
NEW CENTURY MORTGAGE CORPORATION, DECISION
Defendant.
INTRODUCTION
Before the Court is a Motion to Compel Assignment of Mortgage by Plaintiff Beal Bank
USA. On November 28, 2016, Plaintiff filed its initial Complaint to Compel Assignment. Trial
was held on January 10, 2018. On February 16, 2018, Plaintiff filed a Trial Memorandum
arguing that a set of cases from the nineteenth century entitles Plaintiff to judgment in this case.
Plaintiff moves for the Court to compel New Century Mortgage Corporation to assign any
interest it holds in the Mortgage to Plaintiff. For the following reasons, however, the Comi grants
judgment to Defendant.
FACTS
The relevant background underlying the present dispute is derived from Plaintiffs
Complaint and attached exhibits.
Dianah L. Robinson and Ronald C. Robinson received a loan for $53,100.00 and signed a
Note dated September 29, 2006. The Note listed Defendant New Century Mortgage Corporate
("New Century") as the lender. (Pl.'s Ex. 1.) The Robinsons also executed a Mortgage in favor
of Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee of New Century,
1 securing the property located at 755 Airp01t Road, Exeter, Maine 04435 ("Property"). (Pl.'s Ex.
2.)
On December !, 2008, MERS purported to assign the Mortgage to LNV Corporation,
Inc. (Comp!. 1 6; Pl. 's Ex. 3.) On November 9, 2017, LNV Corporation assigned the Mortgage to
Plaintiff. (Pl.'s Ex. 4.)
ANALYSIS
Plaintiff contends that the remedy of compelling an assignment of mortgage is "firmly
rooted" in the law of Maine based on a series of cases from the 1850s. This contention rests on
the premise that the Law Court's more recent decisions regarding the effectiveness of MERS
assignments did not overrule the doctrines on which Plaintiffs argument relies.
The Law Court's ruling in Greenleaf controls the outcome of the present case. The
language of the Mortgage that the Robinsons executed in favor of New Century listed MERS as
"a separate corporation that is acting solely as nominee for Lender and Lender's successors and
assigns." (Pl.'s Ex. 2.) This language exactly matches the language of the mortgage analyzed in
Greenleaf Bank ofAm., NA. v. Greenleaf, 2014 ME 89, 113, 96 A.3d 700. The fact that the
Mortgage in the present case lists MERS as "the mortgagee of record" does not rescue Plaintiffs
claims because the Law Court held that "notwithstanding its reference to MERS as the
'mortgagee of record,' the mortgage in fact granted to MERS 'only the right to record the
mortgage' as the lender's nominee, and 'having only that right, MERS did not qualify as a
mortgagee pursuant to our foreclosure statute."' Id. 114 (quoting Mortg. Elec. Registration Sys.
v. Saunders, 2010 ME 79, 19, 2 A.3d 289). Thus, applying the rulings from Saunders and
Greenleaf to this case, it appears that the December!, 2008 assignment by MERS to LNV
2 Corporation did not effectively assign ownership of the Mortgage to LNV Corporation. Since
LNV Corporation did not have ownership of the Mortgage, it "could not have granted to another
person or entity any greater interest in the mortgage than that enjoyed by" LNV Corporation.
Greenleqf, 2014 ME 89, ,i 16, 96 A.3d 700.
Plaintiff argues that the doctrine of equitable trust entitles Plaintiff to ownership of the
Mortgage despite the Law Comt' s rulings in Saunders and Greenleaf Plaintiff cites Johnson v.
Candage, 31 Me. 28, 31 (1849) for the proposition that "[w]here there is a separation of the note
from the mortgage, the latter continues in force; and by the principles of a comt of equity, the
mortgagee becomes trustee for the holder of the note." Additionally, Plaintiff cites Jordan v.
Cheney, 74 Me. 359,361 (1883), for the proposition that "[o]ne who takes a mo1tgagee's title
holds it in trust for the owner of the debt to secure which the mortgage was given. If a mortgage
is given to secure negotiable promissory notes, and the notes are transferred, the mortgagee and
all claiming under him will hold the mortgaged prope1iy in trust for the holder of the notes."
Plaintiff insists that these cases, among several others that Plaintiff cites in its Trial
Memorandum, support the conclusion that as holder of the Note in this case, Plaintiff is entitled
to ownership of the Mortgage as a trustee; thus, the Court should compel New Century to assign
Plaintiff ownership of the Mortgage.
Plaintiffs argument fails because its reasoning and the cases it cites are inconsistent with
the Law Court's more recent rulings in Saunders and Greenleaf If the equitable trust doctrine
still applied, then the m01tgage-holder would hold the mortgage in equitable trust for the note
holder. See Cheney, 74 Me. 359, 361 (1883). However, if the note-holder was the beneficiary of
an equitable trust that entitled the note-holder to the mortgage, then holding the note would entail
ownership of the mortgage. There would be no separate analyses for holding the note and
3 owning the mortgage because the former would entail the latter. The Greenleaf opinion thus
flatly contradicts the application of the equitable trust doctrine here. See Greenleaf, 2014 ME 89,
112, 96 A.3d 700 ("whereas a plaintiff who merely holds or possesses-but does not necessarily
own-the note satisfies the note pmtion of the standing analysis, the mmtgage portion of the
standing analysis requires the plaintiff to establish ownership of the mortgage."). See also United
States Bank Trust, NA. v. Accredited Home Lenders, CV-15-228, 2017 Me. Super. LEXIS 60, at
*5 (May 2, 2017) ("[t]he court cannot decide here that the holder of the mo1tgage note, as a
transferee of MERS as nominee for defendant mmtgagee, is the owner of the mmtgage as
beneficiary of an equitable trust held by defendant without contradicting the Law Court's
determination in Greenleaf"). If the equitable trust doctrine remained in effect, then the
ineffectiveness of the assignment by MERS would not have necessitated the conclusion that the
plaintiff-bank lacked ownership of the mortgage.
Plaintiff attempts to demonstrate the ongoing vitality of the equitable trust doctrine by
citing to a footnote in the Saunders opinion in which the Law Court cited Averill v. Cone, 129
Me. 9, 149 A. 297 (1930) and Jordan v Cheney, 74 Me. 369 (1883). See Saunders, 2010 ME 79,
1 11 n.3, 2 A.3d 289. The Law Court's citation to these cases, Plaintiff argues, shows that the Law Court has not eliminated the equitable trust doctrine "where the mortgage and note are truly
held by different patties." Id. In Saunders, MERS (the plaintiff in that case) did not hold either
the mortgage or note when it filed its Complaint; the original mortgagee held both the mortgage
and the note. Id. These propositions in Greenleaf, Plaintiff contends, suppo1t Plaintiffs request
for a compelled assignment of mortgage in this case.
Plaintiffs contention that this footnote in Saunders gives the equitable trust doctrine life
would be a legitimate point had the Law Court not rejected it in Greenleaf, in which MERS also
4 purported to assign the mortgage to the plaintiff. Greenleaf, 2014 ME 89, ~ 4, 96 A.3d 700.
There, the Law Court held that the plaintiff bank was the owner of the note. Id. ~ 11. However,
the Law Court also held that the original lender, not the plaintiff, retained ownership of the
mortgage because MERS had no right to assign the mortgage. Id.~~ 15-16. Therefore, in
Greenleaf, "the mortgage and note [were] truly held by different parties." Saunders, 2010 ME
79, ~ 11 n.3, 2 A.3d 289. Nonetheless, the Law Court did not apply the equitable trust doctrine in
Greenleaf Conversely, the Law Court held that the MERS assignment to the plaintiff was
ineffective and "that the [plaintiffJ Bank lacked standing to seek foreclosure on the mortgage and
accompanying note." Greenleaf, 2014 ME 89, ~ 17, 96 A.3d 700. The ruling in Greenleaf
therefore vitiates Plaintiffs argument that it is entitled to a compelled assignment of mortgage
pursuant to the equitable trust doctrine, which the Law Court eschewed.
Plaintiffs arguments conflate possession of the Note with ownership of the Mortgage. To
the extent that Plaintiff argues that its possession of the original mortgage is sufficient to
establish ownership of the mortgage, the Court does not agree. In Greenleaf, the Law Comt
stated that possession of the note was sufficient to establish ownership of the note, because the
note is a negotiable instrument and governed under Maine's Uniform Commercial Code. See
Greenleaf, 2014 ME 89, ~ii 10-11, 96 A.3d 700 (stating that "Section 3-1301 permits a party to
enforce a note ifit is the 'holder of the note, that is, ifit is in possession of the original note that
is indorsed in blank."). The mortgage, however, is not a negotiable instrument. Id.~ 12
("whereas a plaintiff who merely holds or possesses-but does not necessarily own-the note
satisfies the note portion of the standing analysis, the mortgage portion of the standing analysis
requires the plaintiff to establish ownership of the mortgage."). Thus, the Law Court made clear
5 that possession of a mortgage is not sufficient to establish ownership of the mortgage.
Accordingly, the Court does not find that Plaintiff is the owner of the Robinson M01tgage.
Plaintiff's claim to a compelled assignment of the Mortgage is premised on a doctrine
from the nineteenth century that yields consequences that contradict the Law Court's much more
recent rulings in Saunders and Greenleaf, which made clear that possession of the note is not
sufficient to establish ownership of the m01tgage. Therefore, Plaintiff cannot circumvent the
ineffectiveness of the purported assignment of the Mortgage by relying on the equitable trust
doctrine.
The entry is:
I. Plaintiff's Motion to Compel Assignment of the Mortgage is DENIED. 2. The Clerk is directed to incorporate this Order into the docket by reference pursuant to M.R. Civ. P. 79(a). 1 1
Dated: J[ ~~ '6 --if--t-:M-~--Mu-:ra-y- - - ~ Justice, Maine Superior Court
Entered on the docket on 3/9/18