Farm Credit of Maine v. Bessey

• Court: Superior Court of Maine
• Decided: March 20, 2014
• Docket: CUMcv-13-81
• Status: Unpublished

Opinion

STATE OF MAINE BUSINESS AND CONSUMER COURT CUMBERLAND, ss Location: Portland 1 Docket No.: BCD-CV-1 rsl / ;1.1] f>~{M .\_) 'Y;- '\I) 0/. :'•;) l<'/ '"',1.. f " ' ) \.. " \ ·-· ··l ""'t. /

FARM CREDIT OF MAINE, ACA, ) ) Plaintiff, ) ) V, ) ) JOSEPH W. BESSEY, RANGELEY ) STATION, LLC, nnd VALLEY ) ACQUISITIONS, INC., ) ) Defendants ) Order ) (Motion fo1· Default) ) JOSEPH W. BESSEY, VALLEY ) ACQUISITIONS INC., and RANGELEY ) STATION, LLC, ) ) Plaintiffs, ) ) V. ) ) FARM CREDIT OF MAINE, ACA and ) SCOTT G. KENNEY, ) ) Defendants ) )

Joseph Bessey, Valley Acquisitions, [nc., and Rangeley Station, LLC (collectively, the

"Bessey parties,) move for default and default judgment against Defendants Farm Credit of

Maine, ACA and Scott G. Kenney (collectively, Fmm Credit) ill tllis consolidated mattet·. 1

The Court took the motion under advisement on Februmy 7, 2014, pursmmt to the Case

Management Conference Order issued that datc. 2

1 Purswmt to the Order on Motion to Consolid!lto dated F'obrulll)' 26, 20 I4, BCD-CV-13-81 nnd BCD-CV -14-09 were consolidated. The Bessey parties initiated this matter in Aroostook County Superior Cm.u"t on August

28, 2013, by filing a complaint and motion fo1' temporary restraining m·der (TRO) to enjoin a

pending power of sale foreclosme sched\lled fot· September 5, 2013. See M.R. Civ. P. 3. The

complaint was not verified and the motion did not include an nffldnvH as required by M.R. Civ.

P. 65(a). Justice Cuddy initiated a telephonic conference of counsel on August 29,2013. During

the call, Justice Cuddy noted the inadequacies of the complaint and motion. The matter was

continued for a hcal'ing on Septembct· 3, 2013.

Fat"m Credit and Kenney filed an opposition to the TRO, supported by the afftdnvit of

Julianne Ray, on September 2, 2013. Pl'ior to the henrhlg on Septembe1· 3, 2013, the Bessey

pm·ties filed an amended and verified complaint signed by Mr. Bessey. Juslice Cuddy denied the

TRO by order dnted September 4, 2013. On September 5, 2013, the Bessey parties filed fl notice

of appeal of the denial of the TRO and motion to stay the matter ]Jending appeal. After a phone

conference with cowlsel/ Justice Cuddy denied the motion by order dated September I 0, 2013.

Justice Hunter issued n scheduling order on October 18, 2013. The Bessey pa11ies filed a

second amended complnint on October 28, 2013. On December 18, 2013, Ftu'm Credit nnd

Kenney filed their motion to dismiss, bur did no! otherwise answer cmy of the filed complaints.

See M.R. Civ. P. 12(b). On Janum·y 6, 2014, the Bessey pa11ies moved for defa\llt and default

judgment. No return of service has ever been filed with the com·t following the filing of the

original complaint, the mnended complaint, or the second amended complaint.

2 Pnnn Crcdll hns moved to dismiss this mnlter for fhilurc to file 11 reh1rn of service and insufficient service of process. See M.R. Clv. P. 3, 12(ll)(5). Counsel for Farm Credit Informed the Court 111 the Case M11nngemcnt Conference, in the presence of Counsel for the Plaintiffs in this matter, lh11t it would be withdrnwing this 11\0tion should the Court deny the motion for defnull and defnull judgment. Accordingly, the Court does not nddress lhe merits of the motion to dismiss nt lhis time. J During the phone conference wilh Juslice Cuddy, counsel advised lhnt the auction snle hnd been rescheduled until October 8, 2013.

2 The Bessey parties assert that because Farm Credit has defended through the temporary

restraining order and motion for stay and has not answered the complaint, Farm Credit has failed

to respond and the Bessey parties are entitled to default judgment. The Bessey pat1ies also assert

that the same fncts constitute waiver of the defect in the return of service.

A default is on..ly appropriate "[w]hen a patiy against whom a judgment for affmnative

relief is sought has failed to plead or otherwise defend as provided by these mles and that fact is

made to appe!U' by affidavit 01' otherwise." M.R. Civ. P. 55(a). Nevertheless, 11 [b]ecause a party

has no duty to plead until properly served, sufficient service of process is a prerequisite to entry

of default." Adams v. Howe, 2:10-CV-13529, 2011 WL 1743428, at *2 (E.D. Mich. Apt·. 13,

2011 ); accord Silver v. Brown, 678 F. Supp. 2d 1187, 1199 (D,N.M. 2009) ("A motion fm·

default judgment is meritless, however, when the defendants were never properly served.") rev 'd

in part on other grounds, 382 F. App'x 723 (lOth Cu·. 2010). See also M.R. Civ. P. 12(a) (uA

defendant shall serve that defendant's answer withlu 20 days c(/ler the ser11/ce of the summons

and complaint . .. "(emphasis added)).

In this case, the Comt is not entirely clenr upon which form of service the Bessey parties

rely. The motion for default, which was attested to by Attomey Chute, states that the Bessey

parties "simultaneously with the flling with this Conrt, served in hand the defendants, Farm

Credit of Maine and Scott Kenney, through counsel, with the Complaint together with its Motion

for Temporary Restraining Ordcl' and Preliminary Injunction. (A true copy of the receipt for

service upon UPS delivery nppended hereto.)." 4 (M. Default 1.) The service could th\IS be

pursuant to M.R. Civ. P. 4(d)(9) Ol' pursuant to M.R. Civ. P. 4(c)(1). In either case, however, the

Bessey parties were required to file a retmn of service with the comt pmsuant to M.R. Civ. P.

4 It is not clear if "lluough counsel" means thnt lhe complaint was lumdcd from counsel to counsel, or tlu~t the Bessey parties hRndcd the complnint to Farm Credit's counsel. The Court fttrther notes that service of process requires service of both summons and complaint, not just a complaint. M.R. Civ. P. 4(c), (d).

J 4(h). See Brown v. Thaler, 2005 ME 75, ~~ 4-5, 880 A.2d 1113. No return of service has been

filed. Having failed to show proper service that would require Farm Credit or Kenney lo nnswer

pursuant to M.R. Civ. P. l2(n), the Bessey pm1ies are not entitled to defa\llt OJ' default judgment

agftinst Fm·m Credit or Kenney.

Based on the foregoing, the motion of Joseph Bessey, Vftlley Acquisitions, Inc., and

Rangeley Station, LLC for default and default judgment is DENIED. The Clerk sbaU note this

Ordet· on the docket pmsuant to Rule 79(a) of the Maine Rules of Civil Procedme.

Dale: _...:._") _/_:;.,o_/_1'-1.,--'--- M. icbaehMurphy Business and Consmner Comt

Entered on the Docket:~(JtJki - Copies sent via Maii_Eiectronically~

4 Farm Credit of Maine, ACA v. Joseph W. Bessey, Rangeley Station, LLC and Valley Acquisitions, Inc. BCD-CV-13-81

Farm Credit of Maine, ACA Petitioners I Plaintiffs

Counsel: Randy Creswell, Esq. Shawn K. Doil, Esq. One Canal Plaza Suite 900 P.O. Box426 Portland, ME 04112

Joseph W. Bessey, Rangeley Station, LLC and Valley Acquisitions, Inc. Respondents I Defendants

Counsel: Stephean C. Chute, Esq. P.O. Box 707 South Casco ME 04077

Scott G. Kenney 3rd Party Defendant

Counsel: Lauren Weliver, Esq. One Canal Plaza Suite 900 P.O. Box 426 Portland, ME 04112 STATE OF MAINE BUSINESS AND CONSUMER COURT ./ CUMBERLAND, ss Location; Portland DocketNo.: BCD-CV. -13;8~

FARM CREDlT OF MAINE, ACA, ) ) JV1('{Y{\- c.tttn - y o_ o ;to 1LJ 1 ) Plaintiff, ) ) ~ ) ) JOSEPH W. BESSEY, RANGELEY ) STATION, LLC, and VALLEY ) ACQUISITIONS, INC., ) ) Defendonts ) O•·clel' ) (Motion for Valuation and Tempomry ) Restraining Order) JOSEPH W. BESSEY, VALLEY ) ACQUISITIONS INC., nnd RANGELEY ) STATION, LLC, ) ) Plaintiffs, ) ) v. ) ) FARM CREDIT OF MArNE, ACA and ) SCOTT G. KENNEY, ) ) Defendants ) )

BACKGROUND Before the Court is Defenchmts' "Verified Motion Valuatiot\ for Redemption

14 M.R.S.A. § 9-1623 Temporary Restmining Ot·der Rule 65 M.R.Civ.P", which the Comt took

under advisement on February 7, 2014, pursuant to the Case Management Conference Order

issued that date. 1

1 Pursunnt to the Order on Motion to Consolidate dntcd February 26, 2014, this case was consolidated with BCD·CV-14-09. The Cowi interprets the motion to first, request a hearing to estabHsh the value of cet1ain

collatei·ol that is listed on page one of the motion; and second, to ask for n restraining order

banil1g "the collection and possession" of the collateral by the Defendants and to "enjoin the sale

at auction" until the valuation hearing occurs.

DISCUSSION

The Court has reviewed the pal'ties' filings and considered their arguments. Wlule the

parties address a number of issues in theiJ.' filings, the Com1 will address only the issue of

collateral estoppel because it is dispositive of both requests.

The dispute between the parties has taken place, nnd is still ongoing, in several forums.

However, the case thnt is most important for the decision on tltis motion is Bridgton Dis!J·ict

Comi cnse Farm Credit of Maine, ACA v. Bessey, Docket No. SA-13·183, and the judgment

entered on the docket on November 25, 2013, by Judge Peter Goranites. See Judgment, Fm'llr

Credit of Maine, ACA v. Bessey, Docket No. SA-13-183 (Me. Dist. Ct., Bridgton, Nov. 21,

2013). 2 In that case, Farm Credit of Maine, ACA (Fnrm Credit) bl'ougbt a Complaint fot·

Forcible Entry and Detainer for Rctumand Possession of Tangible Personal Propetiy Pursmmt to

14 M.R.S. § 7071 (2013). After a hearing wluch began on August 14,2013, and completed on

Novembet· 8, 2013, Judge Goran..ites determined that Joseph Bessey and Rangeley Station, LLC

were in default of their payment and othet· obligations to Farm Credit under a commercial Ioau

for which Joseph Bessey and Rangeley Station, LLC had pledged certain collateral, which is

listed on the second page of Judge Goranites' decision in pnmgraph 5(a)(i-xi). Judgment, Farm

Credit of Maine, ACA v. Bessey, No. SA-13-183, nt 2. The collateral listed is the same collateral

for which Defendants seek valuation. After Form Credit t·equested a writ of possession,

1 Tho judgment is nttached as Exhibit A to the Scott Kenney affidavit submiltcd in support of Pnnn Credll's motion for nttachment against Joseph 13essey.

2 Defendants filed a notice of appeal to the Superior Cout1 and a motion to stay the Wl'it of

possession and request fot· evidentiary hearing to determine the amount of a bond to protect the

rights of Farm Credit. I.n their motion, the Defendants asked the District Com! to determine the

"net liquidation value" of the ucoJiateral as this Comt has found to be subject to the Order of

Tumover entered upon the docket on Novembel' 25, 2103.n (Pis.' Exh. A at 2.) The "Order of

Tmnover" was the Judgment for Possession issued by J\ldge Om·anites.

The District Court conducted fill evidential)' hearing on the Defendants' motion for stay

on Decem bet· 6, 2013. Aftel' the contested evidentiary hearing requested by the Defendants,

Judge Oomnites set the bond in the amount the Court detet·mincd to t·epresent the value of the

collateral, nnmely $188,000. 3 (Pis.' Exh. B.) The Com·t allowed Defendants tlu·ee days to post

cash ot· commercially reasonable bond, bttt u[a]bsent posting the cash or bondu the Court denied

the motion to stay the writ of possession pending appeal to the Superior Comt. (Pis.' Exh. B.)

Defendants did not post cash or bond. (Ketmey Aff. ~ 20.) Defendants dismissed the appeal to

the Superi01· Court on Febnwry 10, 2014. Farm Credit of Maine, ACA v. Bessey, Docket No.

CUMBSC-AP-13-75 (Me. Supet. Ct., Cmnb. Cty., Feb. 10, 2014).

Collateral estoppel prevents relitigntion of a factual issue if the "ideutlcal issue was

determined by a prior ftual judgmentu and the party who is estopped by the doctl'ine had a "fair

opportunity and incentive to litigate the issue in a priot· proceeding." Macomber v. MacQulnn-

Tweedie, 2003 ME 121, ~ 22, 834 A.2d 131; accord Gray v. TD Bank, NA., 2012 ME 83, ~ 10,

45 A.3d 735.

The value of the collateml in question is obviously a factual issue. Wicks v. Conroy,

2013 ME 84, ~ 15, 77 A.3d 479 ("The determination of an nsset's value is question of fact ... ").

3 Farm Credit asserts that nl the hel!ring, "Defendants ofi'ered evidence that the Collnteml WIIS worth approximntely $75,000." (Opp'n 5.)

3 At Dcfcndauts' request, Judge Goranites decided the value of that coUateral at an evidenthuy

heat·ing. Defendants do not raise au issue as to whethe1· they had a fair opportunity to litigate this

issue of value, and the Court notes that Judge Goranites made this factual determination at the

express request of the Defendants. rn addition, when Defendants wlthdl'ew their appeal of the

District Com1 judgment on Febl'uaty 18, 2014, the stay of the final judgment lifled and now has

preclusive effect. See MacPherson v. Estate of MacPherson, 2007 ME 52, ~~ 5-9, 919 A.2d

1174; Macomber, 2003 ME 121, ~ 22, 834 A.2d 131. The Court concludes that Defendants tll'e

barred under the doctrine of collateral estoppel fi·om re-litigating the value of this collateral and

therefore denies the motion insofar as it requests this Co\ll't make a separate determination.

With respect to the Defendants' request for a tempormy rcstmining ordc1· bnrring

collection and possession of the coUateral by Plaintiff, nud to enjoin its sale, the pnrties agree that

the Defendants must meet all fom criteria set forth in lngmham v. University of Maine at Orono,

441 A.2d 691, 693 (Me. 1982). Because the Defendants have little chance of prevailing on the

merits given the right of redemption provided by the Maine Uniform Commercial Code (UCC),

they arc not entitled to a temporary restraining order.

The Defendants rely upon In re Davis, 14 B.R. 226 (Bank•·· D. Me. 1981 ), fo1· the

proposition that they can stop collection and sale of the collateral by paying to the Plaintiffs what

they assert is the liquidntion value of the property. Howeve1·, the Comi agrees with the Plaintiffs

that the l'ight of l'edemption available to the Defendants under the Uniform Commercial Code

(UCC) requires fulfillment of all of their obligations under the contract, which obligations have

now been accelerated due to default. See 11 M.R.S. § 9-1623(2) (2013) (requiring a debtor to

pay "all obligations secured by the collateral" plus reasonable expenses and attorney fees in

order to redeem collatcml). That amount differs, i.u this cftse, enormously fi·om the amount

4 Defendants assert they can pay under their theory of redemption, namely the liquidation value of

the collaternl. Defendants believe they simply need to pay approximately $75,000 while the

Plaintiffs assert that as of Januory I 0, 2014, the amount owed was $1 ,606, 138. 15. This amount

does include Hccming interest and other fees undet' the contract.

Given the right of redemption available to the Defendants under the UCC, the Court

concludes that Defendants have little likelihood of succeeding on the merits, ~md the Court will

therefore deny theil' request for a tempornry restraining order.

Based on the foregoing, Defendants' motion requesting an evidentiary heal'iug on the

value of the collateral, and for a temporary restraining order, is DENIED. The Clerk shall note

Dnte: _J..,..L.--4-I__,_t_,_r--'-1_("-t_,___ M. ichaela Murphy Business and Consumer Comt

3 Entered on the Docket: ·11·1L/ Copies sent via Maii_Eiectronically V::::

5 Farm Credit of Maine, ACA v. Joseph W. Bessey, Rangeley Station, LLC and Valley Acquisitions, Inc. BCD-CV-13-81

Counsel: Randy Creswell, Esq. Shawn K. Doil, Esq. One Canal Plaza Suite 900 P.O. Box426 Portland, ME 04112

Joseph W. Bessey, Rangeley Station, LLC and Valley Acquisitions, Inc. Respondents I Defendants

Counsel: Stephean C. Chute, Esq. P.O. Box 707 South Casco ME 04077

Counsel: Lauren Weliver, Esq. One Canal Plaza Suite 900 P.O. Box 426 Portland, ME 04112