Denutte v. U.S. Bank

• Court: Superior Court of Maine
• Decided: March 20, 2018
• Docket: CUMbcd-cv-17-62
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. BUSINESS AND CONSUMER COURT LOCATION: PORTLAND DOCKET NO. BCD-CV-17-62 .J

PAMELA DENUITB, ) ) Plaintiff, ) ) v. ) ORDER ON DEFENDANT'S ) MOTION TO DISMISS U.S. BANK, N.A., ) ) Defendant. )

This matter comes before the Court on Defendimt U.S. Bank, N .A.' s motion to dismiss the

complaint. Plaintiff Pamela Denutte opposed the motion and U.S. Bank timely replied. Oral

argument was heard February 15, 2018. Robert M, Brochin, Esq., appeared for movant U.S. Bank

and Meredith C. Ellers, Esq. appeared for Ms. Denutte.

FACTUAL AND PROCEDURAL BACKGROUND Ms. Denutte received a mortgage loan from Merrimack Mortgage Company

("Menimack") on 01· about December 24, 2008. (Pl's Comp!.~ 13.) Menimack subsequently

recorded the original mortgage in the Cumberland County Registry of Deeds (the "Registry") on

December 31, 2008. (PJ's Comp!. ~ 15.) Ms. Denutte fully pe1formed the conditions of the

mortgage and it was discharged by means of a written mortgage release dated May 17, 2013. (PJ>s

Comp!.~ 16.) U.S. Bank, acting as servicer for Merrimack, recorded the original written release

of the mortgage in the Registry on May 28, 2013. (PJ>s Compl. ~ 17.) The Registry mailed the

original recorded mortgage release to U.S. Bank by fil'st class mail on June 6, 2013, (Pl's Cornpl.

~ 18 .) The original release was likely received by U.S. Bank within one to three business days after

1 mailing by the Registry. (Pl 's Comp!.~ 19.) U.S. Bank sent the original recorded mortgage release

to Ms. Denutte with an accompanying cover letter dated September 4, 2013. (Pl' s Comp I. , 21.)

Ms, Denutte filed her one-count Class Action Complaint (the "Complaint") on behalf of

herself and as representative of a putative class of other similarly situated plaintiffs on September

26, 2017, seeking an order certifying the proposed Plaintiff Class and awa1·ding "damages as

provided by the statute[]" on the grounds that U,S, Bank did not timely mail her the original

recorded mortgage release within the timeframe required by Maine statute. (Pl' s Compl. ~~ 36-37,

~~ J-2 at pp. 8-9.) See 33 M.R.S.A. § 551. U.S. Bank responded with the motion to dismiss now

before the Court.

STANDARD OF REVIEW

In reviewing a motion to dismiss under Rule 12(b)(6), courts !(consider the facts in the

complaint as if they were admitted." Bonney v. Stephens Mem. Hosp., 2011 ME 46,, 16, 17 A.3d

123, The complaint is viewed "in the light most favorable to the plaintiff to determine whether it

sets forth elements of a cause of action 01· alleges facts that would entitle the plaintiff to relief

pursuant to some legal theory." ld, (quoting Saunders v. Tisher, 2006 ME 94, j 8,902 A.2d 830). 11 Dismissa[ is warranted when it appears beyond a doubt that the plaintiff is not entitled to reUef

under any set of facts that he might prove in support of his claim.'' ld.

DISCUSSION

Ms. Denutte's lawsuit is based on 33 M.R.S.A. § 551, which specifies a mortgagee's

obligations upon the full pe1formance of the conditions of the mortgage by the mortgagor. Included

in the statute is the requirement that "[w]ithin 30 days after receiving the recorded release of the

mortgage from the registry of deeds, the mortgagee shall send the release by first class mail to the

mortgagor's address as listed in tl1e mortgage agreement. , , ."Id.The st<1tute goes on to prescribe

2 the consequences to a mortgagee who fails to satisfy tJ1is requirement: "If the release is not sent

by first class mail to the mortgagor's address as listed in the mortgage agreement ... within 30

days after recelving the recorded release, the mortgagee is liable to an aggrieved party for damages

equal to exempla!'y damages of $500." Id.

U.S. Bank has moved to dismiss Ms. Denutte's Complaint on the grounds that it is barred

by the statute of limitations. Civil actions gen.erally must be commenced within 6 years after the

cause of action accrues, except as otherwise specifically provided. 14 M.R.S.A. § 752. However,

"[a]ctions for any penalty or forfeiture on a penal statute" must be "commenced within one year

after the commission of the offense," 14 M.R.S.A § 858. Whether a cause of action provided for

by statute falls within the scope of 14 M.R.S.A. § 858 is a matter of statutory interpretation, and

thus a question of lctw. See Mansfield v. Wa:rd, 16 Me. 433,438 (1840).

Based on the allegations in the Complaint, U.S. Bank was required to mail Ms. Denutte the

original release sometime between July 7 and July 9, 2013, but did not 'do so until September 4,

2013. (Pl's Comp!.~~ 18-21.) See 33 M.R.S.A. § 551. Ms. Denutte filed her Complaint on

September 26, 2017, Thus, her lawsuit is brought within the six-year statute of limitations of 14

M.R.S.A. § 752, but outside the one-year statute of limitations of 14 M.R.S.A § 858. At oral I

argument, counsel for Ms. Denutte conceded that the dispositive issue is whethel' 33 M.R.S.A. §

55 I is a penal statute.' If the Court determines that Ms. Denutte' s Complaint brings an action fOT a

pen1Jlty or fo1feiture on a penal statute, the one-yea1· statute of limitations of 14 M.R.S.A § 858

applies and dismissal is proper.

• 33 M.R.S.A. § 551 consists of four unlubeled paragraphs and has a broad scope. The Couit limits its analysis and discussion lo the provision that requires the mortgagee to mail the recorded release from the registry of deeds within 30 days of receipt and allows the aggl'leved party to recover a $500 exemplary damages award from the mortgagee who falls to do so. See People's Sal'. Bank 11, Chelsey, 138 Me. 353, 357-58, 26 A.2d 632 6:14-35 (1942) (statute may 1

consist of both remedial and penal provisions) .

3 Thls Court has previously found the same provision of section 551 penal for purposes of

determining whether the statute ought to be construed narrowly or liberally' against a mortgagee­

defendant. Sabina v. JPMorgan Chase Bank, N.A., No. BCD-CV-14-61 at 6 (Aug, 17, 2015), rev'd

on other grounds, 2016 ME 141, 148 A.3d 284 (hereafter Sabin.a[). Although that case dealt with

the same provlsion of section 551, a different issue was before the Court: whether the statute

required a mortgagee to deliver the actual recorded release of the mortgage it received from the

registry of deeds or whether a copy of the release would suffice, Sabina I at 3; 2016 ME 141, ~~

3-4, 148 A.3d 284. This Court was considering whether a narrow or liberal construction was

appropriate because it ruled that the statute was ambiguous, Sabina I at 4-5. The Law Court held

that the statute "unambiguously requires the mortgagee to send to the mortgagor the mo,tgage

release document that it receives from the registry[.]" 2016 ME 141, ~ 9, t48 A.3d 284.

Consequently, the Law Court never reached the issue of whether the relevant provision of section

551 is penal or remedial. Id. Thus, this Court's determination that section 551 is penal in nature

remains untested on appeal.

Under Maine case law, the terms "punitive damages" and "exemplary damages" are

synonymous. See, e.g., Tuttle 11, Raymond, 494 A. 2d 1353, 1354 (Me. 1985); Braley v. Berkshire

Mut. Ins. Co., 440 A.2d 359, 362 (Me. 1982); Foss v. Me. Tpk, Auth., 309 A.2d 339, 345 (Me.

1973) ("Exemplary, or punitive, damages"); Michaud v. Bangor, 160 Me, 285,288,203 A .2cl 687,

689 (1964) (same). The Legislature is presumed to be aware of the decisions of the Law Court

when it enacts statutory law, Bowler v. State, 2014 ME 157, ~ 8, 108 A.3d 1257,

As this Court noted in Sabina, "[p]unitive damages are by their nature penal, not remedial."

Sabin.a I 11t 6, See also Tuttle, 494 A.2d at 1355-56, 1363 ("primary concern of the doctrine of

•See B11me v. Jo//11 Hc111cock Mur. I)je Ins. Co., 403 A.2d 775, 777 (Mc. J979) ("strict construction necessary for the interpretation of sl<1lutes penal in nacure"),

4 punitive damages is to deter misconduct, not to benefit plaintiffs'\ However, the availabllity of

exemplary damages under section 551 is not dispositive on the ultimate question of whether the

statute is penal·. Statutes which provide for an award of exemplary damages in addition to \ compensatory damages are generally considered remedial. See Michaud v. Bangor, 160 Me. 285,

203 A.2d 687,690 (1964) (citing Halt v. Halt, 112 Me. 234, 91 A. 949 (1914)). See also Auburn

Harpswell Assa. v. Day, 438 A.2d 234 (Me. 1981).

In Michaud, an injured defendant sought double and treble damages against the City of

Bangor for burning his property, and the City defended on the grounds that it was exempt from

"punitive or exemplary damages" as a municipality. 160 Me. at 287, 203 A.2d at 689. The Law

Court held that the City was liable for multiplied damages because the statutes the plaintiff sued

upon were remedial, not penal, as "the right of action [belonged] to the injured party, and the

increased damages [were] only incidental to the general right to recover[.]" 160 Me. at 289,203

A.2d at 690.

The statute in the case now before the Court is outside of Michaud's holding. Although

Section 551 offers a private cause of action to the plaintiff, there is no requirement that the plaintiff

be an "injured party," only that she be an "aggrieved party;" i.e. the plaintiff is required only to

show proof of violation, not proof of injury.' 33 M.R.S .A.§ 551. Not only is a plaintiff not required

to prove actual damages, she is not entitled to recover them: by its express terms, section 551

entitles the injured party to exemplary damages exclusively. In other words, the right to recover

• Ms. Denutte argues thnt because the statute provides that the award of exemplary damages is paid to her as the "aggrieved party," the statute is remedial. See Huntington v. Ar.trill, 146 U.S. 657, 668-69 (1892). See er/so Michaud, 160 Me. at 288 -89, 203 A.2d c1t 690 (citing the same). This argument is belied by the plain language of 14 M.R.S .A. § 858, which states different limitation periods for "a person to whom the penalty or forfeiture is given" (one year) and Lhe State 01· its ugcnl (two years). See also Mansfield, 16 Me. c1t 437-38 (citing Moore v. Sm/t/1, 5 Me. 490 (I829)) ("[The predecessor s!!l!ute to section 858] extends lo fa statute where] the penalty is limited wholly to the pal'ty or person recovering.").

5 exemplary damages is not "incidental to a general right to recover": it is the only recovery

available. Cf. Michaud, 203 A .2d at 690, There is no ''general right to recover" under the statute.

Ms. Denutte argues for a broader application of Michaud's holding. In particular, Ms.

Denutte points to language in Michaud borrowed from WORDS AND PHRASES LEGALLY DEFINED:

"Whether statute is 'penal' or 'remedial' depends on whether pul'pose is to punish offense against

public justlce of State, or to affol'd private remedy to person injured by wrongful act." 160 Me. at

288, 203 A.2d at 689 (quoting 36-A WORDS AND PHRASES LEGALLY DEFINED 544 (edition and

year omitted in original)), (Pl's Opp. 6-7.) Under this definition, the Court finds section 551 to be

a penal statute. The pmpose of the statute is to punlsh mortgagees who violate Maine law, as

evidenced by the Legislatme's use of the term "exemplary damages." The statute requires no

showing of injury and does not entitle the aggrieved party to recover her actual damages. Even if

section 551 would be considered a "penal statute" under the WORDS AND PHRASES definition, the

Michaud Court narrnwed that definition in its holding. 160 Me. at 289, 203 A.2d at 690. Cf.

Marquis v. Wiernikowslci, NO. CV-94-369, 1995 Me. Super. LEXIS 529, *3-4 (section 4613 of

the Maine Human Rights Act not a penal statute because the statute allows for the recovery of both

compensatory and punitive damages), See also Mansfield, 16 Me. at 438 ("[A] statute is to be

considered penal[] when the party recovering is not obliged to make any [ ·1 proof of injury.").

Ms. Denutte next argues that the Court should look beyond the language of the statute to

the entire statutory scheme to determine whether the provision is penal or remedial. (Pl's Opp. 3­

6.) See Me. Real Estate Comm. v.Anderson, 512 A.2d 351 (Me, 1986). Implicit in this argument

is the suggestion that regulatory statutes cannot be penal, and that section 551 is a regulatory statute

or part of a regulatory statutory scheme. (Id.)

6 In Anderson, a real estate broker was found to have violated 32 M.R.S.A. § 4056 (1977),

repealed by P.L. 1987, c. 395, §A 174, when she made a substantial misrepresentation to a client

and engaged in conduct that demonstrated bad faith, incompetency, and improper dealings,

Anderson, 512 A.2d at 352. The real estate broker claimed that the action brought by the Maine

Real Estate Commission (the iccommission") w~s barred by 14 M.R,S.A § 858, arg11ing that

section 4056 was penal and that the one-year statute of limitations of section 858 therefore applied.

Id. at 353. The Law Court disagreed, writing that the statute was not penal because the "manifest

purpose of [the statute] is to protect the public from improper conduct on the part of real estate

brokers" and an "[e]xamination of the larger statutory scheme reveals that the legislative purpose

of the sanctions set forth in section 4056 is regulatory and not penal,>' Id, (quotation marks

omitted).

The opinion in Anderson does not indicate the consequences for the broker: it states only

that the Administrative Court found that the broker violated the statute and that the Superior Court

reversed this decision. There is no mention of what punishment, if any, was levied on the broker

by the Administrative Court or the Commission, and presumably reinstated by the Superior Court

on remand. Id. at 354.

The Court has reviewed sectlon 4056. That statute granted the Administrative Court Judge

the limited power to suspend or revoke an agent's license-it entitled neither a party injured by a

rnal estate agent's misbehavlor nor the State to extract either exemplary or actual damages from

the misbehaving agent. Id, § 4056 (3). It 011ly allowed the Commission to conduct investigations

and the Administrative Court to revoke or suspend licenses. Id. § 4056 (1)-(3). This limitation

entirely removes section 4056 from the Mansfield/Michaud test of whether a statute is penal or

remedial-hence why the Law Court looked to the statutory scheme of Chapter 59 of Tltle 32 to

7 determine that the "legislative pmpose of the sanctions set forth in section 40561s regulatory and

not penal." Anderson, 512 A.2d at 353. Cf. State v. Freeman, 487 A.2d 1175, 1179 (Me. 1985).

The Law Court did not intend to suggest that penal statutes can never serve a regulatory purpose,

Ms. Dunette's final argument is that the availability of "statutory damages" does not render I

a statute penal rather than remedial. (PJ's Opp. 8-10.) This argument is based on the fact that the

federal Fair Debt Collectlon Practices Act and Copyright Act provide for statutory and/or actual

damages, but are generally considered remedial rather than penal statutes. See 15 U.S.C. §

16921<(1 ); 17 U.S .C. § 504(a), (c). U.S. Bank responds that section 551 entitles an aggrieved patty

to exemplary damages, not statutory damages, and that the comparison is therefore misplaced.

(Def's Reply 5-6.)

The Court iigrees with U.S. Bank. Although not made expllcitly, the implication in Ms.

Denutte's argument is that because the $500 exemplary damages award is provided for In a statute,

that it is an award of statutory damages. The Court disagrees with this implication. The primary

purpose of exemplary damage awards is deterrence through punishment. See Tuttle, 494 A.2d at

1356. By contrast, the purpose of statutory damages is something more akin to liquidated damages;

that is, to recompense an injured plaintiff where actual damuges would be difficult or impossible

to prove. See Fish v. Stone, No. 2:17-cv-02093-SHM-EGB, 2017 U.S. Dist. LEXIS 213232, at*

11 (W.D. Tenn. Dec. 29, 2017); Raydiola Music v. Revelation Rob, Inc., 729 F. Supp, 369 (D. Del.

1990). Indeed, two of the cases cited by Ms. Denutte explicitly distinguish statutory damages from

punitive damages. See Sony BMG Music Entm't v. Tenenbaum, 660 F.3d 487,514 (1st Cir. 2011)

("lSJtatutory damages, unlike punitive damages, have both a compensatory and punitive element

.. , statutory damage awards al'e different [from punitive damages]."); Raydiola Music, 729 F.

Supp. at 375. The Legislature chose to explicitly refer to the damages available under section 551

8 as "exemplary damages." The Court must honor that choice and must assume it was deliberate.<

See City o,fBangor, 2005 ME 35, ~ 9,868 A.2cl 177 ("Nothing in a statute is treated as surplusage

if fl reasoirnble constrnction supplying meaning and force is otherwise possible.") (quotations

omitted). /1 I

Upon careful consideration of the arguments raised by the parties, the Comt declines to

deviute from its determination in Sabinal that the relevant provision of 33 M.R.S.A. § 551 is a

penal statute, The one-year statute of limitations of 14 M.R.S.A § 858 thus applies. Ms. Denutte's

action is thus untimely and must be dismissed, U.S. Bank's motion to dismiss is therefore

GRANTED.

CONCLUSION By reiison of the foregoing it is hereby ORDERED:

That Defendant U.S Bank's motion to dismiss is GRANTED.

The Clerk is instructed to enter this Order on the docket for this case incorporating it by reference pursuant to Maine Rule of Civil Procedme 79(a).

Dated: M. Michaela Murphy Justice, Business and Consumer Com·t

Entered on the Docket: .J dIJ. US Copies sent via Mail,_____Electronicalry~

'Interestingly, the statute refers to the noncompllant mortgagee's liability as "damages equal to C7'emplary damages of $500" rather than merely "exemplary damages of $500," At oral argument, counsel for Ms. Denuttc suggested that the distinction may be meaningful bul did not develop the argument further. "Generally, an issue not addressed by the brief of either party nnd raised a! ornl argument is viewed as waived ...." Chadwick-BaRoss, Inc. v. Martin Marietta Corp.,483 A.2d7ll,717(Mc. 1984),