6-8)1, that error proximately caused no harm to plaintiffs. The Katahdin lien was in
effect as of February 28 and precluded plaintiffs from recovering payment in this
transaction, regardless of any errors defendant Phenix may have made after February
28.
Plaintiffs next argue that they can recover from Ms. Silber because she co-owned
the property and was not subject to the attachment order. (Pls.' Opp'n to Def.'s Mot.
Summ. J. 1-3.) A creditor can attach only the interest of the debtor joint tenant. Szelenyi
v. Miller, 564 A.2d 768, 769 (Me. 1989). Ms. Silber is not a party to this action, and the
court may not determine her interest in the property. See 14 M.R.S. § 5963 (2015)
("When declaratory relief is sought, all persons shall be made parties who have or claim
any interest which would be affected by the declaration and no declaration shall
prejudice the rights of persons not parties to the proceeding.").
Finally, plaintiffs argue that the property is exempt from attachment up to
$47,500.00. (Pls.' Opp'n to Def.'s Mot. Summ. J. 2.) A debtor's property is exempt from
attachment up to $47,500.00 when the debtor or a dependent of the debtor uses the
property as a residence. 14 M.R.S. § 4422(1)(A) (2015). A debtor "bears the burden of
establishing that he is entitled to a homestead exemption by demonstrating that (1) the
property subject to attachment and execution is in fact his residence ... and (2) he
• It does not appear that all the exhibits referred to in the Hungerford affidavit are attached to the affidavit.
6 intends to use the exempt proceeds to purchase another residence." Daniels v . Daniels,
593 A.2d 658, 660 (Me. 1991). Plaintiffs admit that defendant Silber has resided in Texas
since 2013, (Opp. S.M.F. '1I 3), and they do not assert that he intended to use any exempt
proceeds to purchase another residence. As a result, there is no genuine issue of
material fact as to whether the exemption applies.
b. Conversion
Plaintiffs argue that defendant Phenix is liable for conversion because it retained
funds to which plaintiffs were entitled. (Pls .' Opp'n to Def.'s Mot. Summ. J. 3.) The
elements of conversion are
(1) a showing that the person claiming that his property was converted has a property interest in the property; (2) that he had the right to possession at the time of the alleged conversion; and (3) that the party with the right to possession made a demand for its return that was denied by the holder.
Withers v. Hackett, 1998 ME 164, '1I 7, 714 A.2d 798.
For the reasons discussed above, plaintiffs cannot show a right to possession of
the funds at the time that defendant Phenix cancelled the checks. If defendant Phenix
had not cancelled the checks, plaintiffs and defendant Phenix would have been liable to
Katahdin for conversion. In Ne. Bank of Lewiston & Auburn v . Murphy, the
defendant's insurer in a car accident case distributed settlement proceeds to the
plaintiff's attorney, Murphy, despite the existence of a lien in favor of a bank on the
settlement proceeds . 512 A.2d 344, 346 (Me. 1986). Attorney Murphy then distributed
the proceeds to himself, the plaintiff, Ms. Crochere, and several third parties. Id. The
court held that both the insurer and the attorney were liable to the bank for conversion
and noted that a party is liable even when he or she "is unaware of the existence of
another's rights in the property." Id. at 347. As a result, plaintiffs and defendant Phenix
would have been liable to Katahdin even though they did not know of the Katahdin
7 lien until after defendant Phenix cancelled the checks. Plaintiffs therefore cannot prevail
on their conversion claim.
c. Negligent Misrepresentation
Although somewhat unclear, plaintiffs appear to argue that plaintiff Champagne
signed a lien waiver in reliance on some misrepresentation by defendant Phenix. (Pls.'
Addt'l S.M.F. Cf[ 15; Pls.' Opp'n to Def.'s Mot. Summ. J. 3-4. ) A defendant is liable for
negligent misrepresentation if (1) in a transaction in which the defendant had a
pecuniary interest, (2) the defendant supplied false information for the guidance of the
plaintiff, (3) without exercising reasonable care or competence, and (4) the plaintiff
justifiably relied on that false information and suffered pecuniary loss. Binette v. Dyer
Library Ass'n, 688 A.2d 898, 903 (Me. 1996). There is no evidence of any lien waiver in
the record. Further, plaintiffs have not adequately alleged a specific misrepresentation
on the part of defendant Phenix. Guiggey v . Bombardier, 615 A.2d 1169, 1173 (Me . 1992)
(explaining that a false representation is an "essential element" of negligent
misrepresentation). On this record, plaintiff Champ, Inc. agreed to payment of
$35,075.41. (Pls.' Addt'l S.M.F. Cf[ 15; Def.' s Reply to Pls.' Addt'l S.M.F. Cf[ 15.) Plaintiffs
have therefore failed to allege a prima facie case of negligent misrepresentation.
d. Passing Bad Checks
Plaintiffs allege that defendant Phenix is liable for passing bad checks under 14
M.R.S. § 6071(1). (Pls.' Opp'n to Def.'s Mot. Summ. J. 3.) That statute provides:
In any action against a person liable for a dishonored check, the holder may recover the amount of the check, the court costs and the processing charges incurred by the holder, plus interest at the rate of 12% per annum from the date of dishonor if: A. The holder gives notice pursuant to section 6073 for payment of the check; and B. The person liable fails to tender the amount of the check, plus bank fees and mailing costs, within 10 days of receiving the notice set forth in section 6073.
8 14 M.R.S. § 6071(1) (2015). A check is "dishonored" w hen it is presented for payment
and the bank refuses payment due to insufficient funds. See BLACK'S LAW DICTIONARY
536 (9th ed. 2009) (defining "dishonor" as "[t]o refuse to accept or pay (a negotiable
instrument) when presented"); Me. Family Fed. Credit Union v. Sun Life Assurance
Co., 1999 ME 43,
dishonored after they were presented for payment and refused). In support of its
argument that defendant Phenix passed bad checks, plaintiffs assert only that defendant
Phenix stopped payment on the checks. (Pls.' Addt'l S.M.F.
dispute, and plaintiffs have offered no evidence that the checks were ever presented for
payment and refused. As a result, there is no genuine issue of material fact as to
whether the checks were dishonored, and the statute does not apply.
3. Defendant Phenix' s Cross-Claim
Defendant Phenix seeks indemnification for defendant Silber's alleged failure to:
(1) notify defendant Phenix of the Katahdin lien, (2) provide sufficient funds to satisfy
all of his payoffs, and (3) pay plaintiff Champagne the money he owed her. (Def.' s Mot.
Summ. J. 18.) By signing the title insurance affidavit, defendant Silber agreed to:
[I]ndemnify and hold harmless [defendant Phenix] from any loss, liability, costs, expenses and attorneys' fee, including attorneys' fees to enforce this agreement, because of any errors or incorrectness of this affidavit and because of any defect, liens, encumbrances or other matters cu rrently affecting or that may affect the title to the land before the recordation of our conveyance or mortgage.
(Supp. S.M.F.
Plaintiffs have not raised a genuine issue of material fact regarding the applicability of
the indemnity agreement and defendant Phenix is entitled to summary judgment on
count I of its cross-claim. Because defendant Phenix is not liable to plaintiffs, def end ant
9 Phenix does not require contribution. See Emery, 1997 ME 162,
Roberts v. Am. Chain & Cable Co., 259 A.2d 43, 50 (Me. 1969).
Defendant Phenix has not included in its statements of material fact any amounts
for which it may be entitled to indemnification. A hearing on damages will be
scheduled. Further, defendant Phenix requests the court order the return to defendant
Silber of $2,782.31. (Def.'s Mot. Summ. J. 20.) There is nothing in the statements of
material fact that permits the court to take that action.
CONCLUSION
No genuine issues of material fact have been raised as to whether defendant
Phenix properly stopped payment on the checks and as to whether defendant Phenix is
liable for negligent misrepresentation, conversion, or passing bad checks . Further no
genuine issues of material fact have been raised as to whether the indemnity agreement
applies.
The entry is
Defendant Phenix Title Services, LLC's Motion for Summary Judgment is GRANTED. Judgment is entered in favor of Defendant Phenix Title Services, LLC and against Plaintiffs Laurie L. Champagne and Champ, Inc. on Plaintiffs' Amended Complaint.
Judgment is entered in favor of Cross-Claim Plaintiff Phenix Title Services, LLC and against Cross-Claim Defendant William G. Silber on Count I of Cross- Claim Plaintiff Phenix Title Services, LLC's Cross- Claim.
Judgment is entered in favor of Cross-Claim Defendant William G. Silber and against Cross-Claim Plaintiff Phenix Title Services LLC on Count II of Cross-Claim Plaintiff Pheni C's .. Cross-Claim.
Dated: January 27, 2016 Nancy Mills Justice, Superior Court
10 EI\1 If Rf l> DEC 1 5 2014
STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION Docket No. CV-14-400 /
LAURIE L. CHAMPAGNE NA1--U1rv1-lklD-IY- And CHAMP, INC.,
Plaintiffs ORDER ON DEFENDANT'S MOTION TO DISMISS OR FOR v. JOINDER OF PARTIES
PHENIX TITLE SERVICES, LLC,
Defendant
I. BACKGROUND
A. Procedural Posture
In their complaint, plaintiffs Laurie L. Champagne and Champ, Inc. seek
declaratory relief and damages against defendant Phenix Title Services, LLC
arising out of a real estate transaction. Plaintiffs allege the following claims:
count I: declaratory judgment; count II: negligent misrepresentation; count III:
conversion; and count IV: passing bad checks. Before the court is defendant's
motion to dismiss pursuant to M.R. Civ. P. 12(b )(7) for failure to join necessary
parties under M.R. Civ. P. 19 or, in the alternative, a motion to join those parties.
For the following reasons, the motion to dismiss is denied and the motion to join
is granted as to William G. Silber and denied as to Tony Langdon.
B. Facts'
Plaintiff Laurie Champagne is an individual and plaintiff Champ, Inc. is a
Maine corporation. (Compl.
foreign limited liability company with an office in Portland, Maine. (Compl.
1 Some facts discussed in the memoranda do not appear in the complaint or documents
the court can consider.
1 Plaintiff Champagne provided services pertaining to the sale of a house in
Falmouth, Maine and plaintiff Champ, Inc. spent money to prepare and maintain
the house for sale. (Compl.
closing, defendant issued two checks, one for $2,468.76 to plaintiff Champagne,
and the other for $35,075.41 to plaintiff Champ, Inc. (Compl.
Five days later, defendant stopped payment on the checks because of a
real estate title encumbrance on the property. (Compl.
several demands for defendant to honor the checks but defendant refused.
(Compl.
written Notice for Nonpayment pursuant to 14 M.R.S. § 6073 (2013). (Compl.
9.) On June 25, 2014, plaintiffs delivered a letter to defendant's attorney, in
which plaintiffs requested an accounting from defendant. (Compl.
Defendant did not provide the accounting and stated it was holding $47,782.31 as
a trustee in a separate matter in the Maine Superior Court, Katahdin Trust
Company v. William G. Silber et al., CARSC-RE-14-09. (Compl.
II. DISCUSSION ·
A. Motion to Dismiss Under Rule 12(b)(7) and Rule 19 Standard
Defendant contends William G. Silber, the seller of the Falmouth property,
and Tony Langdon, the auctioneer who conducted the sale, are necessary parties
under M.R. Civ. P. 19. (Def.'s Mot. Dismiss 1, 9.) Rule 19 requires joinder of
parties subject to service of process and deemed necessary by reference to the
following:
[I]£ (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect
2 that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
M.R. Civ. P. 19(a). Joinder under Rule 19 "protect[s] those who already are
parties by requiring the presence of all persons who have an interest in the
litigation so that any relief that may be awarded will effectively and completely
adjudicate the dispute." Peoples Heritage Bank v. Grover, 609 A.2d 715, 716 (Me.
1992) (citations omitted). The rule protects the present parties by ensuring that
"issues will not have to be relitigated," and avoids prejudice to unjoined but
interested parties. Ocwen Fed. Bank, FSB v. Gile, 2001 ME 120, <[ 14, 777 A.2d 275
(citations omitted).
Dismissal under Rule 19(b-) is discretionary,' and appropriate only when
joinder of p·arties deemed necessary is not possible. Larrabee v. Town of Knox,
2000 ME 15, <[ 11, 744 A.2d 544; see also Grover, 609 A.2d at 716 n.l (noting
dismissal is proper under Rule 19(b) where absent parties are "indispensable" to
the action and cannot be joined). If, however, a necessary party can be joined,
joinder is mandatory. M.R. Civ. P. 19(a) ("[T]he court shall order that the person
be made a party.")
' The court shall determine "whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable" and considers the following factors:
first, to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.
M.R. Civ. P. 19(b).
3 B. Mr. Silber Is a Necessary Party
The parties dispute the consequences that flow from the attachment in the
Katahdin case. Based on plaintiffs' complaint and relevant documents,' there is
no dispute that the basis for this suit is defendant's cancellation of the checks to
plaintiffs and there was no contractual relationship between plaintiffs and
defendant.
According to the HUD-1 settlement statement and attachments, payments
in the amount of $2,468.76 to plaintiff Champagne and $35,075.41 to plaintiff
Champ, Inc. were to be deducted from the sale proceeds paid to Mr. Silber.
(Def.'s Mot. Dismiss Ex. A.) After the closing, defendant received a trustee
summons from the Katahdin case that showed an attachment had been ordered
on Mr. Silber's property and requested defendant disclose any property held.
(Def.'s Mot. Dismiss Ex. F.) Defendant disclosed to the court that it held
$47,782.31 from the Falmouth property sale. (Def.'s Mot. Dismiss Ex. G.) The
attachment in favor of Katahdin Trust Company was eventually released. (Def.'s
Reply Ex. A.)
In defendant's view, the order, attachment, and trustee process gave
Katahdin Trust Company priority as a secured creditor and compelled defendant
to cancel the checks issued to plaintiffs. Defendant argues payment for plaintiffs'
'While ordinarily a court may not examine documents outside the pleadings on a motion to dismiss, the Law Court has recognized an exception for "official public documents, documents that are central to the plaintiff's claim, and documents referred to in the complaint ... when the autheRP.city of such documents is not challenged." Moody v. State Liquor & Lottery Comm'n, 2004 ME 20, <[ 10, 843 A.2d 43. Plaintiffs aver in the complaint that defendant was responsible for conducting the closing; the accuracy of documents from the closing has not been challenged. The HUD-1 settlement statement may therefore be properly considered without converting the motion to dismiss to a motion for summary judgment. Id. (Ex. A attached to Def.'s Mot.) The court refers to the trustee summons and other documents from the Katahdin case and the deed because they are public documents. (Exhs. B, C, D, F, G.)
4 services arose from an agreement with Mr. Silber or Mr. Langdon and because
defendant merely complied with the court's order in the Katahdin case, any
recourse plaintiffs may have for nonpayment is against Mr. Silber or Mr.
Langdon or both. (Def.'s Mot. Dismiss 6-7.)
Plaintiffs argue that responsibility for the underlying issue that led
defendant to cancel the checks, the attachment in the Katahdin case, rests with
defendant because it failed to record immediately the deed for the Falmouth
property. (Pls.' Opp. 2.) Plaintiffs contend that had defendant recorded the deed
prior to the attachment, the checks would have been honored and this dispute
would not have arisen. (Id. 1-2.)
On this sparse record, Mr. Silber appears to be a necessary party, while
Mr. Langdon is not.• Plaintiffs seek compensation for the "services" provided to
facilitate the sale of the Falmouth property. (Compl.
settlement statement, plaintiffs were entitled to compensation from the sale
proceeds to Mr. Silber. Aside from the requirement to issue the checks at the
parties' request, there was no contractual relationship between plaintiffs and
As noted, under Rule 19(a), a party is necessary either if "in the person's
absence complete relief cannot be accorded among those already parties," or if a
• The details of any agreements or understandings among Mr. Silber, Mr. Langdon, and plaintiffs are not apparent from the record. Mr. Langdon's status as a necessary party is far from clear. The HUD-1 settlement statement lists payoffs to plaintiff Champagne in the amount of $2,468.76 and to Mr. Langdon in the amounts of $35,075.42 and $1,377.35. An attachment to the document allocates another $35,075.41 to plaintiff Champ, Inc. (Def.'s Mot. Dismiss Ex. A.) In the motion to dismiss, defendant alleges that because Mr. Langdon directed defendant to issue the checks to plaintiffs, "he may stake a claim to a portion of the funds." (Def.'s Mot. Dismiss 9.) That is not a matter of this record. Even if this was the arrangement, Mr. Langdon's interest in plaintiff Champagne's commission is speculative and not sufficient to deem Mr. Langdon a necessary party in this action. Mr. Langdon's potential claims against Mr. Silber similarly do not make Mr. Langdon a necessary party to this pending suit.
5 present party risks "incurring double, multiple, or otherwise inconsistent
obligations by reason of the claimed interest." M.R. Civ. P. 19(a)(1), (2)(ii).
Having used the escrowed funds to satisfy Mr. Silber's other debt obligations in
the Katahdin case, defendant now risks incurring additional liability. See M.R.
Civ. P. 19(a)(2)(ii). Plaintiffs have sued defendant for an obligation that Mr. Silber
may owe. Furthermore, any relief could prejudice Mr. Silber, including any claim
to any money defendant continues to hold. (Def.'s Reply 4.) If plaintiffs prevail,
defendant may seek indemnification from Mr. Silber, which would require re-
litigation of the issues in this case, an inefficient result that Rule 19 is designed to
avoid. See Ocwen, 2001 ME 120, 9I 14, 777 A.2d 275.
In opposing the motion to dismiss, plaintiffs claim other potential parties
"had nothing to do with Defendant's reason for putting a stop payment on the
checks." (Pl.'s Opp. 3.) Mr. Silber's failure to pay other creditors, however,
resulted in the attachment that led defendant to stop payment. (Def.' s Mot.
Dismiss Ex. F.) Plaintiffs primarily focus on how defendant handled recording
the deed and whether defendant had adequate justification to cancel the checks.
The court need not reach these issues at this stage of the proceeding. In light of
the interests at stake and the relief sought, Mr. Silber is a necessary party who
must first be joined.
C. Silber Must Be Joined
Plaintiffs do not address the issue of whether Mr. Silber can be joined.
Based on this record, it appears Mr. Silber can be made a party to this lawsuit.
Accordingly, Mr. Silber must be joined and defendant's motion to dismiss must
be denied. Larrabee, 2000 ME 15, 9I9I 10-11, 744 A.2d 544. If adding Mr. Silber as a
6 party to this lawsuit proves impossible, the court may at a later date consider
whether this action can proceed in his absence. M.R. Civ. P. 19(b).
William Silber will be joined as a necessary party.
Defendant's Motion to Dismiss is DENIED.
Date: /Z~ /tJ '!f
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