First Tracks Investments, LLC v. Murray, Plumb & Murray

• Court: Superior Court of Maine
• Decided: September 8, 2014
• Docket: CUMbcd-cv-14-30
• Status: Unpublished

Opinion

STATE OF MAINE BUSINESS AND CONSUMER COURT CUMBERLAND, ss LOCATION: Portland DocketNo.: BCD-CV-14-30

FIRST TRACKS INVESTMENTS, LLC ) ) ORDER ON DEFENDANTS' MOTION Plaintiff, ) FOR SUMMARY JUDGMENT ) v. ) ) MURRAY, PLUMB & MURRAY, et al. ) ) Defendants. )

Defendants Murray, Plumb & Murray, Christopher Branson, Esq., and Kelly McDonald,

Esq., (collectively "Defendants") move for summary judgment on all six counts of Plaintiff First

Tracks Investments, LLC's ("First Tracks") First Amended Complaint ("Complaint"). First

Tracks' Complaint stems from Defendants' representation of Ms. Sally Merrill and Sunrise

Schoolhouse, LLC ("Sunrise") in two underlying actions. Defendants represented Ms. Merrill

and Sunrise in a lawsuit initiated by First Tracks seeking a deficiency judgment from the sale of

Ms. Merrill and Sunrise's farm (the "Deficiency Suit"), and a lawsuit filed by Deutsche Bank-

in which First Tracks subsequently replaced Deutsche Bank-for the foreclosure of Ms.

Merrill's home (the "House Foreclosure Suit"). First Tracks alleges that Defendants engaged in

wrongful conduct during the underlying representations and assert two counts of wrongful use of

civil proceedings against Defendants (Counts I and IV), as well as claims for abuse of process

(Count II), fraud (Count III), misrepresentation (Count VI), and tort of another (Count V).

The Court held oral argument on Defendants' Motion for Summary Judgment ("MSJ")

on June 9, 2014. For the reasons discussed below, the Court grants Defendants' MSJ on all

counts. I. BACKGROUND

On April 18, 2008, First Tracks loaned $800,000 to Sunrise. (Plaintiff's Statement of

Facts in Opposition to Defendants' Statement of Material Facts ("Pl.'s Opp. S.M.F."), ~ 3.) Ms.

Merrill was the sole member of Sunrise. (Defendants' Statement of Material Facts ("De f.'s

S.M.F."), ~ 2.) The $800,000 loan was secured by a mortgage on Sunrise Acre Farm and

personally guaranteed by Ms. Merrill. (!d. at~ 3.) Sunrise Acres Farm (the "Farm" or "Farm

Property") contained approximately 145 acres in the town of Cumberland, Maine. (!d. at~ 4.)

On July 1, 2008 First Tracks granted an allonge in the amount of $50,000 to Ms. Merrill as the

sole member of Sunshine. (Pl.'s O.S.M.F., ~ 3.) Subsequently, on September 2, 2008, First

Tracks granted a second allonge to Ms. Merrill as the sole member of Sunshine in the amount of

$25,000. (Jd.) 1

By notice dated June 25, 2009, First Tracks, through its counsel, served a Notice of

Default and Demand on Ms. Merrill. (Pl.'s Additional Statement of Material Facts ("Pl.s

A.S.M.F"), ~ 6.) First Tracks' counsel also prepared a Notice ofMortgagee's Sale of Real Estate

on or about December 9, 2009 ("Notice of Sale"). (Id. at~ 8.) The Notice of Sale contained

several errors. (See Def. 's Ex. 2, Order on Plaintiffs Motion to Dismiss and Motion for

Summary Judgment, 4/8/2012, Horton J., in First Tracks Investments, LLC v. Sunrise

Schoolhouse, LLC and Sally Merrill, Cumberland County Superior Court, Docket No. BCD-CV-

11-31 (the "Deficiency Order"), 4.) The Notice of Sale incorrectly identified the address of an

antique schoolhouse as being a part of the sale property, although the Notice did exempt the

1 For the purposes this Order, there is no relevant distinction between Ms. Merrill and Sunrise. Accordingly, the Court will refer to Ms. Merrill individually, and Ms. Merrill and Sunrise collectively, as "Ms. Merrill."

2 schoolhouse property from the description of property being sold. (!d.) The Notice also failed to

mention the acreage involved or the fact that the property being sold consisted of the Farm. (!d.)

David Perkins, an attorney for First Tracks, conducted the Farm sale at about 8:30a.m.

on January 4, 2010. (!d. at 5.) The sale took place at the intersection where Cross Road, Range

Road and Winn Road meet, where the antique schoolhouse owned by Ms. Merrill stands. (!d.)

Neither the antique schoolhouse nor the roadway beside it was part of the Farm. (!d.) No one

else participated or stopped to observe the sale. (!d.) Mr. Perkins spoke with Mr. Eric

Cianchette, the owner of First Tracks at the time of the Farm sale, by telephone and told him

there were no bidders. (De f.'s S.M.F. ,-r 15.) Mr. Cianchette, on behalf of First Tracks, bid

$850,000 for the Farm Property. (Jd. at ,-r 16.) The total amount of debt owed to First Tracks by

Ms. Merrill as of January 4, 2010 was $990,023.97. (Def.'s Ex. 2, Deficiency Order, 5.)

Meanwhile, several interested persons had gathered at the bam on the Farm Property

based on the reasonable assumption that the Farm sale would be held there. (!d. at 6.) Because

the schoolhouse cannot be seen from the bam parking area, none of those waiting at the bam

were aware that First Tracks' attorney was conducting the Farm sale down the road. (/d.) After

the group of people had waited for some time at the barn, Ms. Merrill's attorney, James Barnes,

was notified that no sale had taken place. (!d.) Mr. Barnes thereafter contacted First Tracks'

counsel via email to ask what had happened. (!d.) At least one other person, not identified in the

Deficiency Suit, contacted First Tracks' counsel to complain about not being able to find the

sale. (!d.) First Tracks' attorneys subsequently filed a post-sale affidavit, took possession of the

Farm, and began making improvements thereto. (/d.)

3 A. The Deficiency Suit.

On June 14, 201 0, First Tracks filed the Deficiency Suit in the Cumberland County

Superior Court alleging that it was owed a deficiency in the amount of$296,972.35, plus interest

and other costs and fees, from the Farm sale. (Def.'s S.M.F., ~ 26.) As part ofthe Deficiency

Suit, First Tracks moved ex parte for an attachment on Ms. Merrill's residence (the "House"),

which was adjacent to, but not a part of the Farm. (!d. at~ 27.) Ms. Merrill initially attempted to

represent herself prose, but on December 28,2010 wrote the court asking for additional time to

respond to a motion for summary judgment filed by First Tracks in the Deficiency Suit stating:

I am told I have grounds to oppose the Motion for Summary Judgment because the foreclosure sale was not done properly. The notice of sale didn't describe the location of the sale in a way that could be found by potential bidders. I know of at least three people who were at the main barn at the farm at the time of the sale and could not find the sale. Because the sale was not properly held, they should not get a judgment for a deficiency.

(!d. at~ 29 (emphasis in original).) Attorney McDonald testified that he understood Ms. Merrill

had been to four or five other attorneys before their meeting and that none had decided to

represent her. (Pl.'s Ex. 23, Deposition of Attorney McDonald ("McDonald Dep."), 23:25-

24:1 0.) In Attorney McDonald's handwritten notes of options to explore regarding the

Deficiency Suit, he wrote "Michael Waxman Jay Sweet Bill Robitzek. Crazy litigator. He'll do

it on contingency" and explained that "that was a general category and that that's what I would

need to find." (!d. at 50:3-6, 53:16-21.) Attorney McDonald's notes reflect that he also

considered the following options for Ms. Merrill: filing bankruptcy, instituting incompetency

proceedings, and referring her to Pine Tree Legal Assistance. (!d. at 46:11-4 7:10, 50:18-25,

53:3-12.) Attorney McDonald's notes also state "Bluff David Perkins. Get Money and get rid of

deficiency." (!d. at 50:12-13.) Attorney McDonald's notes further reflect that he considered

4 challenging the Farm sale based on the price ofthe sale and the site of where the sale was

conducted. (Pl.'s Ext. 26, McDonald Handwritten Notes, MPM00426.)

Prior to entering an appearance in the Deficiency Suit, Attorneys Branson and McDonald

called Attorney Perkins to set up a meeting. (Pl.'s Ex., 6, Affidavit of Attorney David Perkins

("Perkins Aff."), ~ 17.) Attorney Perkins claims that Attorneys Branson and McDonald were

both "excited" or "amped up" at the meeting and informed Attorney Perkins that they had

located a bidder who wanted to bid on the Farm Property, but couldn't find the auction. (!d.)

Attorneys McDonald and Branson allegedly told Attorney Perkins that First Tracks needed to

make this go away or it would be very bad for First Tracks because Defendants would argue the

Farm would have sold at a much higher price if the bidder had been able to find the auction.

(!d.) Attorneys McDonald and Branson also allegedly demanded $150,000 in cash and an

opportunity for Ms. Merrill to stay in her house in order for First Tracks to avoid costly litigation

and delay. (Jd.) Attorney Perkins interpreted these comments as a threat to his client that they

would be involved in prolonged litigation unless First Tracks accepted Attorneys McDonald and

Branson's offer. (Id at~ 18.)

Following the meeting, Defendants sent Attorney Perkins a letter dated December 21,

2010, stating that the Farm Property was valued at $2,827,000 on October 10,20072 and that

taking into account the $850,000 sale price at the auction, Ms. Merrill had $1.7 million worth of

equity in the property that was lost due to the foreclosure. (Def.'s Reply Exhibit 3, Branson

Letter to Perkins, MPM EMAIL 00058.) Defendants then proposed to settle the matter on the

following terms: "First Tracks pays Sally [Ms. Merrill] $225,000 and releases all claims against

2 Attorney Branson's letter refers to the 2007 appraisal of the Farm as taking place on October 10, 2007, however, Defendants refer to the same appraisal as taking place in September 2007, while First Tracks simply refers to it as the 2007 appraisal. (See e.g. Def.'s S.M.F., ~ 33; Pl.'s A.S.M.F. ~55.) To avoid confusion, the Court will refer to this as the 2007 appraisal.

5 her. In return, Sally will vacate the [House] property within sixty days, will deed the property to

First Tracks, and will release First Tracks from all claims." (Id. at MPM EMAIL 00059.)

On or about January 13,2010, Defendants entered an appearance on behalf of Ms.

Merrill in the Deficiency Suit and filed a motion to amend their answer and assert counterclaims.

(Def.'s S.M.F. ~ 30.) Defendants raised defenses to the Deficiency Suit and asserted eight

counterclaims on behalf of Ms. Merrill, including: 1) a declaratory judgment that the Farm

foreclosure sale was not valid; and 2) a count for "wrongful foreclosure" based upon the alleged

loss of equity in the Farm when it was sold at auction. (Def.'s Ex. 9, Ms. Merrill's Amended

Answer, Affirmative Defenses, and Counterclaims, 7-10.) Defendants' also claimed that the

Farm Property was worth $2.8 million based on the 2007 Appraisal performed by professional

appraiser Patricia Ms. Amidon. (Id. at 5.)

B. Norman Mason and the Mason Affidavits.

Prior to entering an appearance, Defendants interviewed witnesses Norman Mason and

Medley Watson Jr. who provided affidavits-attached to Ms. Merrill's amended answer,

affirmative defenses and counterclaims-that they had attempted to go to the sale, but had been

unable to find it. (Def.'s S.M.F. ~ 37.) Attorney McDonald could not find any notes from this

meeting with Mr. Mason and believes that the notes he took were made on his laptop and became

Mr. Mason's first affidavit in the Deficiency Suit (the "First Mason Affidavit"). (Pl.'s Ex. 23,

McDonald Dep., 78:12-79:7.) Attorney McDonald does not remember whether he spoke with

Mr. Mason about how much he was prepared to bid, what he intended to do with the Farm,

whether Ms. Merrill owed Mr. Mason money, or whether Mr. Mason had the financial capability

to purchase the Farm. (!d. at 81 :7-83:23.) Instead, Attorney McDonald testified that the key

thing about the meeting was "that [Mr. Mason] attempted to go to the sale, it wasn't at the most

6 logical place on the farm for the sa:le, he couldn't find the sale, and that he had some interest in

bidding on the farm if he had found the sale. (Id. at 82:8-14.)

As noted, Attorney McDonald prepared the First Mason Affidavit, which Mr. Mason

executed on January 1, 2011. (See Def.'s S.M.F., ~~ 41-43; Def.'s Ex. 5, First Mason Affidavit.)

In the affidavit, Mr. Mason stated that he went to the Farm to attend the auction, brought a check

for the deposit, and was prepared to bid. (Def. 'sEx. 5, First Mason Affidavit,~~ 4-5.) Mr.

Mason further stated that he waited at the main bam of the Farm for over an hour, but never saw

attorneys from Perkins Olson or any representatives from First Tracks. (ld. at~ 7.) Mr. Mason

was accompanied in the barn by his son, Larry Mr. Mason, and Medley Watson Jr., who were

also looking for the sale. (Jd. at~ 8.)

Subsequently, First Tracks served a subpoena duces tecum for financial information on

Mr. Mason. (Defendants' Reply to First Tracks' Additional Statement of Material Facts ("Def.'s

R.A.S.M.F."), ~ 43.) Mr. Mason called Attorney McDonald who thereafter entered into a limited

representation of Mr. Mason with respect to objections to First Tracks' document requests and

the pending deposition. (Pl.'s Ex. 27, Deposition Transcript ofNorman Mr. Mason ("Mr. Mason

Dep."), 22:4-10; Pl.'s Ex. 23, McDonald Dep., 191:14-19.) During the deposition, Mr. Mason

testified that he brought his checkbook with him to the sale, and would have written out a

personal check at the auction if he had bid. (Def.'s Ext. 12, Mr. Mason Dep., 16:8-17:22.) Mr.

Mason explained that he was interested in buying the Farm "[i]fit was a good trade," but that the

primary reason he went was to protect a loan he made to Ms. Merrill. (Jd. at 36:13-37:21.) Mr.

Mason did not have $50,000 in his checking account to cover the $50,000 deposit, but felt

confident he could have moved money around to come up with $50,000. (!d. at 17:11-18:9.)

7 Following the deposition, Attorney Perkins withdrew as counsel for First Tracks in the

Deficiency Suit because he believed he would likely become a witness therein regarding the

Farm sale. (Def. 'sEx. 13, Deposition of David Perkins ("Perkins Dep."), 13:4-14:15.)

Thereafter, First Tracks served Mr. Mason within an amended subpoena, but rather than

compelling production of the records, First Tracks accepted a second affidavit from Mr. Mason

to satisfy his obligation under the subpoena (the "Second Mason Affidavit"). (Def.'s S.M.F., ~

50.) The Second Mason Affidavit provided that Mr. Mason did not go to the sale with the

"intention of bidding" on the Farm, and that he did not have enough "liquid funds to purchase the

real property for the amount of money [he] underst[ood] it sold for." (Def.'s Ex. 14, Second

Mason Aff., ~~ 8, 13.) The affidavit further provided that even if Mr. Mason had satisfied the

terms contained in the Notice of Sale, he "would have bid no more than $100,000 at the

auction[.]" (!d. at~ 9.) Subsequently, First Tracks' attorneys issued a check to Mr. Mason for

$440 and another check for $440 to Mr. Mason's son for reimbursement of the legal fees they

incurred preparing the Second Mason Affidavit, (See Def. 's S.M.F., ~~52-53.) In a mediation

brief submitted subsequent to the Second Mason Affidavit, Ms. Merrill claims that Mr. Mason

arrived at the barn "prepared to bid on the Farm." (Def.'s Ex. 43, Mediation Submission of Ms.

Merrill and Sunrise, 4.)

C. Patricia Amidon and the Farm Property Appraisals.

In the 2007 Appraisal, Ms. Amidon valued the Farm Property at approximately $2.8

million. (Def.'s S.M.F. ~ 33.) On January 10 and 11, 2011, Attorney McDonald spoke with Ms.

Amidon regarding the real estate market and land values in general. (!d. at~ 56.) During the

conversation, Ms. Amidon explained that land values drop the most during a recession. (Pl.'s

Ex. 23, McDonald Dep., 63:10-64:16.)

8 Defendants subsequently retained Ms. Amidon to perform a two-phased assignment.

(Def. 's S.M.F. ~58.) Under the first phase, Ms. Amidon was to provide "preliminary values of

the property ... that meets the minimal reporting criteria for USAP by February 11, 2011. (Id.;

Def.'s Ex. 21, Engagement Letter form Patricia Ms. Amidon, 2.) The second phase was to

consist of an "expanded report with final values," which would be "provided at a later time if

needed." (Id.)

Ms. Amidon completed the first phase of the assignment on March 11, 2011,

preliminarily valuing the Farm Property at $1,340,000 (the "3/11111 Appraisal"). (Def.' s S.M.F.

~ 65.) First Tracks was aware that Defendants intended to have an updated appraisal performed

regarding the value ofthe Farm Property as of January 4, 2010. (Def.'s Ex. 13, Perkins Dep.,

21:22-22:1.) Prior to the expert witness deadline of September 18,2011, Defendants consulted

with another expert appraiser, Al Childs. (Def.'s S.M.F. ~ 73.) Ultimately, Defendants chose

not to designate Mr. Childs. (Id.) Instead, Defendants asked Ms. Amidon to prepare a second

report. (Def.'s S.M.F. ~ 74.) Unlike the 3/11/11 Appraisal, Ms. Amidon was asked in the

second report to perform opinions of value based upon an assumed division of the property into

nine separate economic units. (Id.). Prior to asking Ms. Amidon to assume the proposed

division ofthe property, Attorney John Shumadine ofMurray Plumb & Murray researched and

determined that the Farm could be divided into separate units without requiring subdivision

approval. (Def.'s S.M.F. ~ 75.)

Ms. Amidon provided her second report on the Farm Property on September 15, 2011

(the "9/15/11 Appraisal"). (Pl.'s S.M.F. ~ 77.) The 9115/11 Appraisal concluded that when the

Farm Property is valued by multiple economic units, rather than as a whole, it is worth

approximately $1,785,000. (Pl.'s S.M.F. ~ 77; Def.'s Ex. 31,9115111 Appraisal). First Track's

9 Mortgage on the Farm, however, provided that "Grantee may sell the Mortgaged

Premises ... either as a whole or in parcels together will all improvements that may be thereon, by

a public sale." (Pl.'s S.M.F. ~ 12; Pl.'s Ex. 22, Corporate Mortgage, P. 11 of20, Sec. 3.10(b).)

The 9/15/11 Appraisal also stated that Ms. Amidon reviewed a "prior appraisal dated March 11,

2011 that [she] conducted on the property with a valuation date of January 4, 2010." (Ex. 31 to

Def.'s S.M.F., Cover Letter to 9115111 Appraisal, p 2.)

Earlier in the litigation, First Tracks had propounded requests for production of

documents on Ms. Merrill. (See Def.'s Ex. 25, Ms. Merrill's responses to First Tracks' Request

for Production of Documents.) Requests 1 and 18 sought documents related to the Farm's value

as well as any valuations or appraisals performed thereon. (!d. at 1, 5.) Defendants, on behalf of

Ms. Merrill, responded to First Tracks' request on March 7, 2011 agreeing to produce responsive

documents. (See id.) Requests 1 and 18 were not specifically objected to, but Defendants did

make a general objection to all requests "to the extent that these requests seek documents

protected against disclosure by the attorney-client privilege, Rule 26(b)(3) of the Maine Rules of

Civil Procedure, or the work product doctrine." (!d. at 1.) On August 3, 2011, an attorney for

First Tracks wrote a letter specifically requesting production of certain documents, including

those that relate to any valuation and/or appraisal done for the [Farm Property]." (Pl.'s S.M.F. ~

65.) Defendants did not produce the 3/11111 Appraisal to First Tracks at this time. This was

allegedly because Ms. Amidon was a consulting expert who had not been designated to testify

and that the 3/11111 Appraisal and Defendants' communications with Ms. Amidon were

protected from disclosure by M.R. Civ. P. 26. (!d. at~ 70.)

On September 19, 2011, First Tracks designated Mark Plourde as an expert witness, who

appraised the Farm's value as of January 4, 2010 at $1,440,000. (Def.'s Ex. 33, First Tracks'

10 Expert Witness Designation of Mark Plourde.) On that same day, Defendants designated Ms.

Amidon as an expert witness and produced the 9115/11 Appraisal to First Tracks. (Def. 's S.M.F.

~ 77.) The next day, Charles Remmel, an attorney for First Tracks, emailed Attorney McDonald

noting the 9/15/11 Appraisal's reference to the 3/11/11 Appraisal. (Pl.'s Ex. 14, MPM EMAIL

01046.) Mr. Remmel stated that he was troubled because he recalled Defendants making

representations after March 11, 2011, that the last appraisal of the Farm was carried out in 2007.

(See id.) Mr. Remmel requested a copy ofthe 3/11/11 Appraisal, and received a copy on

October 5, 2011. (!d.; Def. 's S.M.F. ~ 81.) Defendants also produced Ms. Amidon's notes and

file materials after designating her as an expert. (Def.'s S.M.F. ~ 82.)

On October 26,2011, Attorney McDonald referenced the 9/15/11 Appraisal in an email

stating that "[i]fMs. Amidon's appraisal is all we have to rely on, she could be undermined by

the bulk sale/multiple sale parcel argument." (Pl.'s Ex. 47, MPM Email 03335-6.)

Subsequently, First Tracks deposed Ms. Amidon on December 8, 2011, at which First Tracks'

counsel questioned Ms. Amidon about the bases for her 9/15/11 Appraisal and the differences

between the 3/11111 Appraisal and the 9/15/11 Appraisal. (Def.'s S.M.F. ~ 83.) First Tracks did

not file a motion for sanctions against Ms. Merrill or Defendants in the Deficiency Suit for any

alleged discovery violations or file a motion for Rule 11 violations. (Def.'s S.M.F., ~ 86.)

D. The House Foreclosure Suit.

First Tracks purchased the note and mortgage on Ms. Merrill's House from Deutsche

Bank, and took over the foreclosure of her home in the House Foreclosure Suit pending in the

Cumberland County Superior Court. (Def.'s S.M.F. ~ 88.) First Tracks filed motions for

summary judgment twice in the House Foreclosure Suit while Ms. Merrill defended the case pro

se. (Def.'s S.M.F. ~ 89.) Both motions were denied. (Jd.) First Tracks filed a third motion for

11 summary judgment in April of2011. (Def.'s S.M.F. ~ 92.) Defendants entered an appearance

on behalf of Ms. Merrill in the House Foreclosure Suit on May 25, 2011 and filed an objection to

the motion, along with a motion to stay the case. (!d) In the motion to stay, Defendants argued

that "[t]he [Farm Property] was appraised for $2.8 million in []2007 ... As of January 4, 2010, the

[Farm Property] was encumbered with debt (held by First Tracks) of approximately $1.1

million" and that "Ms. Merrill had equity in the farm worth approximately $1.7 million." (Pl.'s

S.M.F. ~ 107.) Defendants alleged in the motion to stay that "the failure to hold a commercially

reasonable sale ofthe [Farm] deprived Ms. Merrill of substantial equity" and that ifit "had been

sold on commercially reasonable terms, it would have likely realized sufficient funds to

discharge the mortgage on Ms. Merrill's House." (Pl.'s S.M.F. ~ 108.) First Tracks

subsequently withdrew its motion for summary judgment, and the court granted Ms. Merrill's

motion to stay on October 13, 2011. (Def.'s S.M.F. ~~ 93, 94.)

E. Disposition of the Deficiency Lawsuit.

On January 25, 2012, First Tracks filed a motion to dismiss and motion for summary

judgment on Ms. Merrill's remaining counterclaims. (Def.'s S.M.F. ~ 96.) First Tracks

voluntarily withdrew its deficiency claim against Ms. Merrill at oral argument premised and

conditioned on the Deficiency Suit court's intention to rule in First Track's favor on Ms.

Merrill's counterclaims. (Def.'s Ex. 2, the Deficiency Order, 7.) Subsequently, on April 13,

2012, Justice Horton issued an order granting summary judgment against Ms. Merrill's

counterclaims. (Def.'s S.M.F. ~98; Def.'s Ex. 2, the Deficiency Order.) The Deficiency Order

found in pertinent part that:

1) Ms. Merrill and Sunrise sought a legal remedy in the form of damages rather than equitable relief for the allegedly improper foreclosure sale (12, 15) 2) The notice of sale ofthe Farm Property was inaccurate or incomplete in several respects (15-16)

12 3) Ms. Merrill and Sunrise did not present evidence of a qualified bidder (18); 4) Maine has not adopted a rule preferring the sale of property as parcels, over a sale en masse (14); 5) First Tracks was not required to put forth efforts to promote the sale beyond those required by statute (18); 6) Nothing in the record suggested any bidder would have bettered First Tracks' $850,000 bid (18); and 7) As a result Ms. Merrill and Sunrise have not offered evidence on the basis of which a reasonable factfinder could find in their favor as to either causation or damages on their counterclaims (19-20).

(Def.'s Ex. 2, Deficiency Order.) The Deficiency Order resolved all remaining claims in the

Deficiency Suit. (See id. at 7.)

II. Discussion

"To survive a defendant's motion for a summary judgment, the plaintiff must establish a

prima facie case for each element of [their] cause of action." (Bonin v. Crepeau, 2005 ME 59,,;

8, 873 A.2d 346.) "The function of a summary judgment is to permit a court, prior to trial, to

determine whether there exists a triable issue of fact or whether the question[ s] before the court

[are] solely ... oflaw." (Bouchard v. American Orthodontics, 661 A.2d 1143, 44 (Me. 1995).)

Summary judgment is appropriate where there are no genuine issues of material fact and the

moving party is entitled to judgment as a matter oflaw. (M.R. Civ. P. 56( c); see also Levine v.

R.B.K. Caly Corp., 2001 ME 77,,; 4, 770 A.2d 653.) A "material fact" is one that can affect the

outcome of the case, and a genuine issue exists when there is sufficient evidence for a fact finder

to choose between competing versions ofthe fact. (Lougee Conservancy v. City-Mortgage, Inc.,

2012 ME 103, ,;11, 48 A.3d 774.)

Summary judgment is also appropriate if, looking at the record in the light most favorable

to the non-moving party and drawing all reasonable inferences in that party's favor, no

reasonable juror could find for the non-moving party. (Id. at,; 14, n. 3 (quoting Scott v. Harris,

550 U.S. 372, 377 (2007)).) This is true "even when concepts such as motive or intent are at

13 issue ... if the non-moving party rests merely upon conclusory allegations, improbable inferences,

and unsupported speculation." (Dyer. v. Dep 't. ofTransp., 2008 ME 106, ~ 14, 951 A.2d 821

(quoting Vives v. Fajardo, 472 F.3d 19,21 (1st Cir. 2007)); Bouchardv. American Orthodontics,

661 A.2d 1143, 1144-45 (Me. 1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

249-50 (1986)) ("Ifthe evidence is merely colorable, or is not significantly probative, summary

judgment may be granted").) Accordingly, a "judgment as a matter of law in a defendant's favor

is proper when any jury verdict for the plaintiff would be based on conjecture or speculation."

(Stanton v. Univ. of Maine System, 2001 ME 96, ~ 6, 773 A.2d 1045.)

Motions for summary judgment must be supported by citations to record evidence of a

quality that would be admissible at trial. (Levine, 2001 ME 77, ~ 6, 770 A.2d at 656 (citing M.R.

Civ. P. 56(e).) Facts supported by record citations in a supporting or opposing statement of

materials facts are deemed admitted unless properly controverted. (M.R. Civ. P. 56(h)(4); see

also Farrell v. Theriault, 464 A.2d 188, 194 (Me. 1983).) When ruling on a motion for summary

judgment, courts are only required to consider "the portions of the record referred to, and the

material facts set forth, in the parties' statement of material facts to determine whether there is no

genuine dispute of material fact." (Lubar v. Connelly, 2014 ME 17, ~ 34, 86 A.3d.)

A. The Court Need Not-and Does Not-Reach Defendants' Arguments That First Tracks' Has No Private Cause of Action Under Any Count of the Amended Complaint.

Defendants raise two arguments they assert dispose of every count in First Tracks'

Complaint. First, Defendants argue Maine law does not recognize a right of action against

opposing counsel for fraud or misrepresentations based on court filings or litigation conduct.

(Def.'s MSJ, 16.) Second, Defendants assert that the litigation privilege bars all of First Tracks'

14 claims. (!d. at 19.) Maine law does not offer a definitive answer to these questions. 3 Due to this

uncertainty, and because Defendants are entitled to summary judgment on each of First Tracks'

causes of action on an individual basis, the Court need not-and does not-address these

arguments.

B. Summary Judgment is Warranted against First Tracks' Fraud and Misrepresentation Claims Because No Reasonable Juror Could Find First Tracks Justifiably Relied on Defendants' Allegedly Fraudulent Misrepresentations.

First Tracks asserts two separate counts based on fraud (Count III) and misrepresentation

(Count IV). First Tracks' fraud claim is premised on the 3/11/11 Appraisal, while its

misrepresentation claim involves the 3/11/11 Appraisal and the Mason Affidavits. (First Tracks

Amended Complaint,~~ 90-93, 103-108, 19-40.)

In order to establish fraud and misrepresentation causes of action First Tracks must

demonstrate by clear and convincing evidence that: (1) Defendants made a false representation;

(2) of a material fact; (3) with knowledge of its falsity or in reckless disregard of whether it is

true or false; (4) for the purpose of inducing First Tracks to act in reliance upon it; and (5) that

First Tracks justifiably relied upon the representation and acted upon it to its damage. (Barr v.

Dyke, 2012 ME 108, ~ 16, 49 A. 3d 1280.) Justifiable reliance is not present where the plaintiff

acts contrary to the alleged fraud or misrepresentation. (See Linscott v. State Farm Mut. Auto.

Ins. Co., 368 A.2d 1161, 1164-65 (Me. 1977) ("The added expense to plaintiff of securing

Virginia counsel was ail incident of defendant's appropriate exercise of his own legal rights as an

adversary and not the result of reliance by plaintiff on misrepresentations of fact by defendant

insurance company"); see also Simmons, Zillman, & Gregory, Maine Tort Law § 11.06 (2004

3 To the extent Defendants are seeking to extend the litigation privilege, this argument must fail as this Court does not have the authority to create new privileges. (See Citizens Communication Co. v. Attorney General, 2007 ME 114, ~~10-14 and n. 2.)

15 ed.) ("Maine cases require a showing of justifiable reliance. The element is clearly lacking

where the plaintiff acts contrary to the representation" (citing Linscott, 368 A.2d at 1164-65)).)

1. Misrepresentations Arising From the First Mason Affidavit.

First Tracks asserts that Defendants "knowingly and intentionally provided false

information" as to whether Mr. Mason was a qualified bidder at the Farm sale. (First Tracks

Amended Complaint,~~ 31-36.) The allegedly false information stems from the First Mason

Affidavit. There, Mr. Mason stated that he went to the sale prepared to bid on the Farm and that

he brought a check for the deposit with him. (Def.' sEx. 5, Mr. Mason Aff., ~ 5.) Relying on

this information, Defendants claimed that Mr. Mason brought "a check in the amount of $50,000

(the deposit required by the Notice of Sale to bid) and was prepared to bid on the Farm. (Def. 's

Ex. 9, January 13,2011 Counterclaim,~ 9; January 13,2011, Objection to First Track's Motion

for Summary judgment, 2l Following Defendants' submission of this affidavit, First Tracks

served a subpoena duces tecum for financial information on Mr. Mason. (Pl.'s A.S.M.F. ~ 43.)

Attorney McDonald agreed to represent Mr. Mason on a limited basis to object to First Tracks'

document requests and to represent him in the deposition First Tracks' scheduled. (Pl.'s Ex. 27,

Mr. Mason Dep., 22:4-10; Pl.'s Ex. 23, McDonald Dep., 191 :14-19.) Based on revelations made

during the deposition, First Tracks' attorneys served Mr. Mason with an amended subpoena, but

rather than compelling production of the records, First Tracks accepted a second affidavit from

Mr. Mason. (Def. 's S.M.F. ~~ 49-50.) In the second affidavit, Mr. Mason testified that he did

not go to the sale with the intention of bidding on the Farm and that he did not have enough

liquid funds to purchase the property. (!d. at~ 51.) The affidavit further provides that even if Mr.

4 First Tracks also cites to statements allegedly made in Defendants' Statement of Material Facts of February 23, 2012, but did not provide a copy of the alleged documents in the record.

16 Mason were a qualified bidder at the auction, he "would have bid no more than $100,000 at the

auction[.]" (De f.'s Ex. 14, Second Mason Aff., ~ 7.)

Viewing the facts in the light most favorable to First Tracks, the Court finds that no

reasonable juror could find First Tracks relied upon the alleged misrepresentations in the First

Mason Affidavit or any statements stemming therefrom. To the contrary, First Tracks

challenged those representations by issuing a subpoena duces tecum, deposing Mr. Mason, and

working with Mr. Mason to issue a second affidavit partially contradicting the first affidavit.

Accordingly, there is no genuine issue of material fact as to whether First Tracks justifiably

relied on the alleged misrepresentations in, or arising out of, the First Mason Affidavit.

2. Fraudulent and Misrepresentative Statements Connected to the 3/11111 Appraisal.

First Tracks' also asserts that they relied on Defendants' representations that they had

provided all appraisals for the Farm Property when, in fact, they had not disclosed the 3/11/11

Appraisal. (First Tracks' Complaint,~~ 90-91.) In particular, First Tracks points to statements

made in the Deficiency Suit after the 3/11111 Appraisal that the "Farm was last appraised in []

2007 at a value of $2,837,000" and that there was "equity in the amount of approximately $1.8

million." (E.g. Pl.'s Ex. 28, Ms. Merrill and Sunrise Amended Counterclaims in Deficiency Suit,

~~ 5, 22.) First Tracks asserts that Defendants' did not disclose the 3/11111 Appraisal to force

First Tracks to incur litigation expenses and to delay the litigation to keep Ms. Merrill in her

House. (ld. at~ 93.)

Similar to the statements contained in and arising out of the First Mason Affidavit, no

reasonable juror could find that First Tracks relied on Defendants' alleged representations

regarding the appraisals and value of the Farm. Indeed, rather than rely on these statements,

17 First Tracks retained their own expert to evaluate and contradict the statements. (Def.'s Ex. 33,

First Tracks' Expert Witness Designation of Mark Plourde.)

In tacit recognition, First Tracks attempts to shift the inquiry by arguing that its retention

of an appraiser to value the Farm Property was their justifiable reliance. (Pl.'s Opp. to MSJ, 39.)

This type of reliance, however, was rejected by the Law Court in Linscott. The Court held that

the plaintiffs claim of deceit failed as a matter of law because even if there was a

misrepresentation, "the complaint reveals the plaintiff did not rely upon such misrepresentation

but defied it." (368 A.2d 1161, 1164-65 .) The plaintiff defied the representation by securing

counsel to prosecute the underlying claim. (!d.) "The added expense to plaintiff of securing

Virginia counsel was an incident of defendant's appropriate exercise of his own legal rights as an

adversary and not the result of reliance by plaintiff on misrepresentations of fact by defendant

insurance company." (Id.) Accordingly, assuming for the sake of argument that Defendants

wrongfully withheld the 3/11111 Appraisal and made misrepresentative statements, First Tracks'

retention of an appraiser and continued litigation regarding the Farm's value does not constitute

justifiable reliance as a matter of law.

For these reasons, summary judgment is warranted against First Tracks' fraud and

misrepresentation causes of action because it cannot demonstrate justifiable reliance.

C. Summary Judgment is Warranted Against First Tracks' Tort of Another Claim as a

Matter of Law.

In Count V of the Complaint, First Tracks seeks attorneys' fees, costs and interest

incurred in the Deficiency and House Foreclosure Suits arguing the Defendants' tortious conduct

required First Tracks to bring and defend "actions against a third party." (First Tracks'

18 Complaint, ~~ 101, 102.) The American rule, however, provides that "absent a statutory

provision or contractual agreement litigants bear their own attorney fees and litigation costs."

(Colquhoun v. Webber, 684 A.2d 405,413 (Me. 1996.).) First Tracks does not assert any statute

or contract as the basis for its claimed attorney fees and costs. Instead, First Tracks argues that

its fits within the "tort of another" exception as recognized in Gagnon v. Turgeon, 271 A.2d 634,

635 (Me. 1970).

The status of the "tort of another" exception, also known as the collateral litigation

exception, in Maine is uncertain. In Soley v. Karl!, the Law Court noted that "Maine has not

recognized the collateral litigation exception to the American rule ... " (2004 ME 89, ~ 11 n.3,

853 A.2d 775.) In Gagnon, however, the Law Court espoused what appears to be the collateral

litigation exception, without labeling it as such. (See 271 A.2d at 635.) This Order treats the

collateral litigation exception as recognized in Maine in substance, if not in name.

The collateral litigation exception provides that "[w]here the wrongful act of a defendant

has involved the plaintiff in litigation with others, or placed him in such relation to others as

makes it necessary for him to incur expense to protect his interest, such costs and expenses,

including attorneys' fees, must be treated as the legal consequence of a wrongful action and may

be recovered as damages." (Gagnon, 271 A.2d at 635; see also Restatement (Second) of Torts§

914 (1977).) Gagnon, however, recognized an important limitation to the collateral litigation

exception. Namely, the exception "does not apply to attorneys' fees incurred in litigation

between the plaintiff and defendant, or between persons in privy to the contract agreement or

events through which the litigation arises. (ld. at 635-36 (citing Armstrong Constr. Co. v.

Thomson, 390 P.2d 976 (Wash. 1964)).)

19 The cited Armstrong Construction opinion explains the rationale for both the exception

and the limitation on the exception as follows:

In those actions, where the acts or omissions of a party to an agreement or event have exposed one to litigation by third persons-that is, to suit by persons not connected with the initial transaction or event-the allowance of attorney's fees may be a proper element of consequential damages .... The fulcrum upon which the rule balances, then, is whether the action, for which attorney's fees are claimed as consequential damages, is brought or defended by third persons-that is, persons not privy to the contract, agreement or events through which the litigation arises."

(!d. at 979.)

Here, the fulcrum upon which the exception balances tilts against First Tracks.

Assuming for the sake of argument that First Tracks has stated a valid cause of action premised

on the collateral litigation exception -whether as a stand-alone claim or for tortious interference

with prospective economic advantage as First Tracks intimates in its MSJ Opposition-summary

judgment is still warranted because the collateral litigation exception does not apply. This is

because the "third party" referenced in the Complaint is Ms. Merrill. (Pl.'s Opp. to MSJ, 44.)

Defendants, as Ms. Merrill's attorneys in the underlying suits, are clearly privy to Ms. Merrill's

actions therein. Going a step further, the heart of First Tracks' Complaint is premised on actions

and representations allegedly carried out by Defendants, not Ms. Merrill. (See id. at 43, n.32.)

Therefore, viewing the facts in the light most favorable to First Tracks, no reasonable juror could

conclude the Defendants were third parties or not privy to the underlying events in the

Deficiency and House Foreclosure Suits. Accordingly, summary judgment is warranted against

First Tracks' tort of another claim as a matter oflaw-as either a stand-alone cause of action or

as a theory under which to recover for an intentional interference with prospective economic

20 advantage 5-because the collateral litigation exception does not apply and First Tracks is barred

by the American rule from recovering the attorney's fees, time, and other expenditures incurred

in the underlying suits.

D. Summary Judgment is Warranted Against First Tracks' Wrongful Use of Civil Proceedings Claim Because Defendants Had Probable Cause and No Reasonable Juror Could Find Defendants Pursued an Improper Primary Purpose.

First Tracks asserts two counts against Defendants for wrongful use of civil proceedings.

(First Tracks' Complaint, Counts I and IV.) Count I claims Defendants' assertion and continued

litigation of its counterclaims in the Deficiency Suit was a wrongful use of civil proceedings

because they lacked probable cause to pursue their claims. Count IV is similar to Count I, but

focuses on Defendants' assertion of defenses in the Deficiency and House Foreclosure Suits.

Defendants argue that there is no evidence to support any of the elements of a wrongful

use of civil proceedings claim. (Defendants' MSJ, 31.) The elements are: (1) one initiates,

continues, or procures civil proceedings without probable cause; (2) with a primary purpose

other than that of securing the proper adjudication of the claim upon which the proceedings are

based; and (3) the proceedings have terminated in favor of the person against whom they are

brought. (Pepperell Trust Co. v. Mountain Heir Financial Corp., 1998 ME 46, ~ 15,708 A.2d

651,656 (adopting the Restatement (Second) ofTort's definition of wrongful use of civil

proceedings).)

5 Damages are an essential element of a tortious interference with prospective economic advantage claim. See Rutland v. Mullen, 2002 ME 98, ~ 13, 798 A.2d 1103 ("Tortious interference with prospective economic advantage requires a plaintiff to prove (1) that a valid contract or prospective economic advantage existed; (2) that the defendant interfered with that contract by fraud or intimidation; and (3) that such interference caused damages").)

21 1. Whether Defendants Had Probable Cause to Pursue the Deficiency Suit Counterclaims and the Defenses in the House Foreclosure and Deficiency Suits.

The determination of whether probable cause exists is a question oflaw. (Restatement

(Second) of Torts § 673 cmts, e and h.) In wrongful use of civil proceedings claims, a jury has

no function regarding the probable cause determination unless there is a conflict in the testimony

about the circumstances under which the defendant acted in initiating the filing or proceedings.

(See id.) In that case, the jury determines what the defendant did or did not do, and under what

circumstances the act or omission occurred. (!d.) The court then determines whether, under

those circumstances, the defendant had probable cause. (See id.)

Probable case is present if a party has "a reasonable belief in the possibility that the claim

may be held valid. (Restatement (Second) of Torts§ 674 cmt. e (1977) (cited to by Morse Bros.,

Inc. v. Webster, 2001 ME 70, ~ 22, 772 A.2d 842); see also Tobin v. Liberty Management, Inc.,

2004 WL 1433631 * 2 (Me. Sup. Ct. 2004, J. Mead) (citing Restatement (Second) ofTorts §

675).) "[W]hile the person initiating civil proceedings cannot have a reasonable belief in the

existence of the facts on which the proceedings are based if he knows the alleged facts are not

true and his claim is based on false testimony, it is enough if their existence is not certain but he

believes that he can establish their existence to the satisfaction of court and jury." (Restatement

(Second) of Torts § 675 cmt. d.) Many civil proceedings, in order to be effective, "must be

begun before all of the relevant facts can be ascertained to a reasonable degree of certainty. To

put the initiator of civil proceedings to a greater risk of liability would put an undesirable burden

upon those whose rights cannot be otherwise effectively enforced." (!d.)

Similarly, "[i]fthe legal validity of a claim is uncertain, the person who initiates the civil

proceeding may believe that his claim is meritorious, but he can have no more than an opinion

22 that the chances are good that the court might decide to uphold it." (Id. at cmt. f.) In that

instance:

The question is not whether he is correct in believing that the court would sustain the claim, but whether his opinion that there was a sound chance that the claim might be sustained was a reasonable one. To hold that the person initiating civil proceedings is liable unless the claim proves to be valid, would throw an undesirable burden upon those who by advancing claims not heretofore recognized nevertheless aid in making the law consistent with changing conditions and changing opinions. There are many instances in which a line of authority has been modified or rejected. To subject those who challenge this authority to liability for wrongful use of civil proceedings might prove a deterrent to the overturning of archaic decisions. (!d.)

First Tracks offers an expansive argument in support of its claim that Defendants lacked

probable cause because there was never evidence of causation or damage in support oftheir

defenses and counterclaims. (Pl.'s Opp. to MSJ, 22.) In support, First Tracks points to the

following alleged facts: 1) Defendants knew that four or five other law firms had rejected the

case before it came to them; 2) Attorney McDonald wanted to shop the case around for a "crazy

litigator" to take the case on contingency; and 3) Defendants explored bankruptcy, incompetency

and other options such as referring the case to Pine Tree Legal Assistance as opposed to

litigation. (!d. at 23-24.) Instead of pursuing these options, First Tracks contends Defendants

settled on trying to "bluff' First Tracks' attorney and threatening to "hassle" First Tracks through

prolonged litigation if First Tracks didn't provide Ms. Merrill housing and money. (Id. at 24.)

First Tracks also argues Defendants filed the counterclaims without any evidence as to

the Farm's value after being advised that property values had plummeted since 2008 and that

liquidation (auction) value was 50-70% of fair market value. (Id. at 25.) Then, after filing the

counterclaims, Defendants received the 3/11111 Appraisal, valuing the Farm at $1.34 million.

(Id.) Applying a 70% liquidation value, First Tracks argues the Farm's value was $938,000,

23 which was approximately $50,000 less than the amount owed on the mortgage note. (Id) As a

result, First Tracks argues Defendants lacked probable cause because there was no evidence of

damages from the foreclosure sale. Furthermore, as the litigation progressed, Defendants hired

Appraiser AI Childs in June 2011. (Id at 26.) Mr. Childs opined that liquidation value was

between 50-65% of fair market value and that banks were reporting they ended up purchasing

properties held at auction in 99% offoreclosures. (!d). First Tracks further argues the 9/15111

Appraisal lacked a valid legal foundation and did not support Defendants' claim for damages.

(Id at 26-28.) Taking all of this together, First Tracks claims Defendants' knew they could not

recover damages from the Farm sale.

First Tracks also argues Defendants had no evidence of causation in support of their

counterclaims. (Id at 28.) In particular, First Tracks argues that from the outset, Mr. Mason was

not a qualified bidder, nor was there any evidence that he was. (Id at 29.) Furthermore, after

Mr. Mason's deposition and the Second Mason Affidavit clarified that he: 1) did not have a

certified check; 2) did not have $50,000 in his checking account; and 3) would not have bid more

than $100,00 for the Farm, there was no question that there were no qualified bidders for the

Farm sale. (Id at 29.)

Finally, First Tracks argues that genuine issues of fact exist as to whether Defendants'

had probable cause to believe the auction was conducted improperly, as the only statements

regarding the auction process in the Deficiency Order were dicta. (Id at 30-31.)

Defendants respond that their counterclaims had merit as evidenced by the Deficiency

Order. (Def. 's MSJ, 32.) In particular, Defendants' argue that their counterclaim only failed

regarding a matter of first impression on one element. (Id)

24 Here, viewing the evidence in the light most favorable to First Tracks, the Court finds the

Defendants had probable cause to initiate and pursue the counterclaims and defenses in the

Deficiency Suit. The Court agrees that other law firms turning down Ms. Merrill's case and

Defendants' exploration of other options before agreeing to represent Ms. Merrill-including

"bluffing" First Tracks-presents some evidence that Ms. Merrill's case lacked merit. When

viewing the evidence in the record as a whole, however, the Court is persuaded that Defendants

had a reasonable belief in the possibility that the counterclaims and defenses could be held valid.

Prior to entering an appearance and asserting counterclaims on behalf of Ms. Merrill,

Defendants were aware ofthe 2007 Appraisal valuing the Farm Property at $2,827,000. (Def.'s

Reply Ex. 3, Branson Letter to Perkins, MPM EMAIL 00058.) While Defendants were-or

should have been-aware that the Farm Property's value dropped since the 2007 Appraisal, it is

clear that Defendants had a reasonable belief that their wrongful foreclosure claim could

establish some amount of damages at the time they initiated the action. This remains true even

after Defendants received the 3/11111 Appraisal and consulted with Mr. Childs. Appraisals are

expert statements of opinion about a property's value. The fact that one expert provided an

opinion that the Farm Property was not worth more than the Farm sold for does not make it

unreasonable for Defendants' to believe another appraiser would value the Farm higher. To find

Defendants lacked a reasonable belief that their claim could possibly be valid based on

unfavorable expert witness opinions of fact would create a dangerous precedent opening the

flood gates for spurious litigation from unhappy litigants. (See Bradbury v. GMAC Morg. LLC,

780 F.Supp.2d 108, Ill (D. Me. 2011) (warning against rulings that would permit an unhappy

litigant in one action to seek damages in a separate action in virtually every lawsuit.)

25 In addition, the Defendants had a sound chance that the basis of the 9/15/11 Appraisal

might be sustained as a reasonable basis for the defenses and wrongful foreclosure counterclaim.

Although the mortgage provides that the Farm Property may be sold as a whole or in parcels it

cannot be said that Defendants' lacked probable cause to assert the Farm should have been sold

in parcels. This is because even though Maine has not adopted a rule preferring the sale of

property in parcels over a sale en masse, other states have. (See Def.'s Ex. 2, Deficiency Order,

14 (citingApplefieldv. Fid Fed Sav. & LoanAss'n ofTampa, 137 So.2d 259,261 (Fla. App.

1962)).) Furthermore, Defendants carried out legal research determining that the 9/15/11

Appraisal was not prohibited from being sold, and valued by multiple economic units. (Def.' s

S.M.F. ~ 75.) Accordingly, Defendants possessed probable cause in spite ofthe 9/15111

Appraisal because the sale by parcels was possible and Defendants sought to pursue that

possibility through an argument for a new interpretation of Maine law. (Restatement (Second) of

Torts § 675 cmt. f.)

Similarly, Defendants had probable cause to pursue their counterclaims even though there

was no qualified bidder at the Farm Sale. Defendants apparently argued in the Deficiency Suit

that First Tracks should have put forth additional efforts to advertise and generate interest in the

sale. (Def. 'sEx. 2, Deficiency Order, 18.) The Deficiency Suit court found this theory

plausible, but rejected the legal argument that First Tracks was under an affirmative duty to make

efforts to publicize the property or the sale beyond publishing the statutorily required notice.

(!d) Similarly, while the Deficiency Suit court found Defendants' evidence regarding what the

bid price should have been-or the lack thereof-insufficiently persuasive, this does not mean

Defendants' lacked probable cause to make the argument. (Id at 19.)

26 Finally, First Tracks argument that Defendants lacked probable cause to believe the Farm

sale was conducted improperly is flatly contradicted by the Deficiency Order which held that the

Notice of Sale contained several inaccuracies, including "the fact that the actual location of the

sale was contrary to the published location .... " (!d. at 15.) These statements were not dicta.

Accordingly, the Court finds Defendants are entitled to summary judgment on First

Tracks' wrongful use of civil proceedings cause of actions because the Defendants had probable

cause to initiate and pursue their defenses and counterclaims.

2. No Reasonable Juror Could Find Defendants Opposed the Deficiency and House Foreclosure Suits and Pursued the Deficiency Suit Counterclaims For an Improper Primary Purpose.

The Restatement (Second) of Torts sets forth a number of situations where civil

proceedings were initiated for an improper primary purpose. (Restatement (Second) of Torts §

676 cmt. c.) The situations include when a party: 1) does not believe his claim is meritorious; 2)

pursues the action solely to harass the opposing party; and 3) pursues the action solely to delay

proceedings. (!d.)

First Tracks claims Defendants filed the counterclaims solely to harass First Tracks into

reaching a settlement that had no relation to the merits of the claim; and 2) to delay proceedings

to allow Mr. Ms. Merrill to stay in her house longer. (Pl.'s Opp. to MSJ, 31-32.)

Defendants respond that they asserted the counterclaims because had they not, the claims

would have been waived. (Def.'s MSJ, 32-33.) In addition, Defendants argue it was reasonable

to believe that they could prevail on their counterclaim. (Id. at 33.)

Here, viewing the facts in the light most favorable to First Tracks, the Court accepts that

the Defendants were motivated, at least in part, by a desire to keep Ms. Merrill in her house and

27 obtain a favorable settlement for her. These purposes, however, are not improper. 6 First,

Defendants' allegedly improper attempts to "extort" a settlement are wholly consistent with the

Deficiency Suit counterclaim that First Tracks owed Ms. Merrill money for a wrongful

foreclosure. Similarly, Defendants' allegedly improper attempt to keep Ms. Merrill in her house

was consistent with contesting the sought after attachment ofthe House in the Deficiency Suit.

If Ms. Merrill defended on her wrongful foreclosure claim, she hoped to use the money she

obtained to pay offthe mortgage on her House. (Def.'s Ex. 40, Entry of Appearance, Objection

to Motion for Summary Judgment and Motion to Stay in the House Foreclosure Suit ("Motion to

Stay the House Foreclosure Suit"), 4.) As discussed above, the Court has found as a matter of

law that Defendants had probable cause to pursue these claims.

In addition, Defendants represented Ms. Merrill on a contingency basis. (Pl.'s Ext. 23,

McDonald Dep. 164:12-15.) When an attorney represents a client on a contingency basis, the

attorney only recovers money if the client prevails. Here, the fact that Defendants would only be

paid for their services if they prevailed in their counterclaims weighs against First Tracks' claim

that Defendants primary purpose in instituting the counterclaims was to delay proceedings.

Accordingly, no reasonable juror could find Defendants defended the Deficiency and House

Foreclosure Suits and Pursued the Deficiency Suit counterclaims for a primary, improper

purpose.

E. Summary Judgment is Warranted Against First Tracks' Abuse of Process Claim Because No Reasonable Juror Could Conclude That Defendants' Used Court Documents or Process in an Improper Manner.

6 The Court would also note that First Tracks' suggestion that it was improper to keep Ms. Merrill in her home long after she had defaulted runs contrary to recent Maine legislative enactments and judicial rules of Civil Procedure which set exacting standards for lenders who attempt to foreclose upon defaulting homeowners. While one could argue the wisdom of such provisions, it cannot be denied that those laws and rules have the undeniable effect, for better or worse, of doing just what Ms. Merrill sought in part to do through the deficiency suit, which was to remain in her home as long as she could while she litigated these matters.

28 In order to state a cause of action for abuse of process, the plaintiff must demonstrate that

the defendant: 1) initiated or used a court document or process, in a manner not proper in the

regular conduct of proceedings; 2) with the existence of ulterior motive; 3) resulting in damages

to the plaintiff. (Tanguay v. Asen, 722 A.2d 49 (Me. 1998).)

First Tracks alleges Defendants' committed an abuse of process based in part on

discovery abuses arising from the fraudulent misrepresentations and omissions asserted in First

Tracks' fraud and misrepresentation claims. (See First Tracks' Complaint,~~ 79-80, 84-85.)

More broadly, First Tracks argues that Defendants affirmative defenses and counterclaims in the

Deficiency Suit constituted an abuse of process. (See id. at 36-37.) These actions were allegedly

carried out for the improper, collateral purposes of keeping Ms. Merrill in possession of her

House for as long as possible and attempting to coerce a settlement agreement. (First Tracks'

Opp. to Def.'s MSJ, 38.)

Defendants' argue that First Tracks' claims fail as a matter of law because they do not

involve "process." (Defendants' MSJ, 26-28.) Defendants' also argue the alleged process was

not used improperly or with an ulterior motive. (ld. at 28-30.) Finally, Defendants argue there is

no evidence that First Tracks suffered damages as a result of the alleged abuses of process. (Id.

at 30-31.) Assuming for the sake of argument that Defendants utilized "process," the Court

nevertheless finds summary judgment is warranted against First Tracks' because no reasonable

juror could conclude the process was utilized in an improper manner.

1. Whether Defendants' Counterclaims and Affirmative Defenses Can Serve As the Basis for an Abuse of Process Claim.

Maine law indicates that the filing of a complaint-or counterclaim or affirmative

defense-is a regular use of process, but can serve as the basis for an abuse of process claim if it

is used for an immediate purpose other than that for which it was designed and intended. In

29 Advanced Const. Corp. v. Pilecki, the Law Court explained that "[t]he filing of a lawsuit

qualifies as a regular use of process and cannot constitute abuse of process, even if the filing was

influenced by an ulterior purpose." (2006 ME 84, ~ 23, 901 A.2d 189 (citing Tanguay, 1998 ME

277, ~ 5, 722 A.2d 49).) Although Advanced Construction appears to stand for the general

proposition that the filing of a complaint cannot serve as the basis for an abuse of process claim,

a closer inspection reveals a more nuanced rule.

Tanguay, upon which Advanced Construction relies for the aforementioned proposition,

cites to Potter, Prescott, Jamieson & Nelson, P.A. v. Campbell, 1998 ME 70, ~ 7,708 A.2d 283

("Campbell"), and Simon v. Navon, 71 F .3d 9 (1st Cir. 1995) ("Simon") for support. (1998 ME

277, ~ 5, 722 A.2d 49.) Campbell notes that Simon and its holding are consistent with Maine

decisions which involve abuse of process claims. (1998 ME 70, ~ 7, 708 A.2d 283.)

Specifically Campbell approved of Simon's assertion that "[f]iling of a lawsuit is a 'regular' use

of process, and therefore may not on its own fulfill the requirement of an abusive act, even if the

decision to sue was influenced by a wrongful motive, purpose or intent." (!d. (quoting Simon, 71

F.3d at 16).) Simon, however, also explained that an improper use of process "for an immediate

purpose other than that for which it was designed and intended" may serve as the basis for an

abuse of process claim. (!d. at 15 (quoting Restatement (Second) of Torts § 682 (1977).)

Accordingly, Simon recognized that "a defendant who explicitly threatened to file a baseless

lawsuit solely for the purpose of forcing the plaintiffs action in an unrelated matter, and then did

commence suit, could be held liable for [abuse of process or malicious prosecution]." (!d.)

Simon's interpretation is consistent with the Law Court's decision in Saliem v. Glovsky,

which explained that for abuse of process claims, "[t]he test is probably, whether the process has

been used to accomplish some unlawful end, or to compel the defendant to do some collateral

30 thing which he could not legally be compelled to do." (132 ME 402, 172 A. 4, 6.) "The gist of

[an abuse of process claim] consists in the unlawful use of a lawful process. The bad intent must

culminate in an actual abuse of the process by perverting it to a use to obtain a result which the

process was not intended by law to effect. Regular use of process can not constitute abuse, even

though the user was actuated by a wrongful motive, purpose or intent." (!d.)

Accordingly, the counterclaim and affirmative defenses raised by Defendants on behalf

of Ms. Merrill can serve as the basis for an abuse of process claim if First Tracks can

demonstrate they were filed for an immediate purpose other than that for which they were

designed and intended.

2. Whether a Reasonable Juror Could Find Defendants' Counterclaims and Affirmative Defenses Were Filed for an Immediate Purpose Other than that For Which They Were Designed and Intended.

Viewing the facts in the light most favorable to First Tracks, the Court finds no

reasonable juror could conclude Defendants filed the counterclaims and affirmative defenses for

an immediate purpose other than their intended purpose. For the purposes of the present motion

the Court accepts First Tracks' argument that Defendants were motivated, at least in part, by a

desire to keep Ms. Merrill in her House and obtain a favorable settlement from First Tracks.

This, however, does not demonstrate an improper purpose. Defendants' allegedly improper

attempts to obtain a settlement are wholly consistent with their counterclaims that First Tracks

owed Ms. Merrill money for a wrongful foreclosure.

Similarly, Defendants'· actions to delay the House Foreclosure Suit were not used for an

immediate improper purpose. Defendants sought to stay the House Foreclosure Suit because

they had probable cause to believe Ms. Merrill could obtain a settlement or award to pay off the

House mortgage based on First Tracks' allegedly wrongful foreclosure. (Def.'s Ex. 40, Motion

31 to Stay the House Foreclosure Suit, 4.) No reasonable juror could find that Defendants'

advocacy against First Tracks' House Foreclosure and Deficiency Suits is not a perversion of the

judicial process. While the lawsuit was undoubtedly stressful and clearly very expensive for First

Tracks, vigorous assertions of claims and defenses and claims on behalf of a client, when

supported by probable cause, is exactly the function of attorneys in our justice system.

Furthermore, as previously discussed, Defendants represented Ms. Merrill on a contingency basis

and would have no economic motive to delay proceedings.

Accordingly, summary judgment is warranted against First Tracks' abuse of process

claim to the extent it is premised on Defendants' counterclaims and affirmative defenses.

3. Whether Defendants' Alleged Discovery Abuses Can Serve As the Basis for an Abuse ofProcess Claim.

Maine law is unclear whether discovery abuses constitute process sufficient to support an

abuse of process claim. In Howison v. Morgan, the Superior Court held that "[u]nsuccessful

attempts to obtain writs of attachment, wrongful failures to comply with discovery, and

unsuccessful (even if repeated) filings of motions-even spurious motions-do not constitute a legal

basis for the tort of abuse of process." (2000 WL 33676156, *2 (Me. Super. Jan. 3, 2000).)

Instead, the proper remedy is to seek sanctions from the court in the underlying case. (!d.)

While the Maine federal district echoed the sentiment in Howison that certain discovery

processes, such as false affidavits and certifications in support of a motion for summary

judgment do not constitute "process" under Maine law, it cited to contrary case law indicating

discovery abuses can serve as the basis for an abuse of process claim. (Bradbury, 780 F.Supp.2d

at 111 n.ll.) Bradbury stated:

Generally the term refers to "legal process" invoking state power such as a subpoena, attachment, and a mechanic's lien. [S]ome of the cases, however, refer to "discovery" as "process," e.g. Advanced Constr. Corp. v. Pilecki, 2006 ME 84,

32 901 A.2d 189, 197 (Me. 2006) ("abuse of process claims can ... arise from the misuse of the procedures for obtaining a lien" and also "when litigants misuse individual legal procedures, such as discovery, subpoenas, and attachment after a lawsuit has been filed.") Arguably the Law Court was referring there to discovery filings that invoke state power in demanding a response, such as a notice of deposition, the filing of interrogatories, or a request for admissions. I do not resolve here whether the filing of an affidavit or certification meets the definition of process.

(Id.) Advanced Construction, cited by Bradbury, relies on Pepperell Trust Co. v. Mountain Heir

Fin. Corp. (2006 ME 84, ~23, 901 A.2d 189.) Pepperell, in tum, cites to Simon, supra, in

support of its claim that "[t]ypical abuse of process cases involve misuses of such procedures as

discovery, subpoena, and attachment." (1998 ME 46, ~ 14 n. 8, 708 A.2d 651 (quoting Simon,

71 F.3d at 15).) Simon explains that:

Typical abuse of process claims involve the misuse of such procedures as discovery, see Twyford v. Twyford, 63 Cal.App.3d 916, 923-34, 134 Cal.Rptr. 145, 148-49 (1976); subpoenas, see Board of Education of Farmingdale Union Free Sch. Dist., 38 N.Y.2d [397,] 403-04 [1975]; and attachment, see Saliem v. Glovsky and Fogg, 132 Me. 402,404, 172 A. 4 (1934).

(71 F.3d at 15.) Twyford, upon which Simon relies found that interrogatories and depositions

constitute "process." (63 Cal.App.3d 916, 923-24, 134 Cal.Rptr. 145 (following Barquis v.

Merchants Collection Association, supra, 7 Cal. 3d 94, 104 n.4 at 94 n.4 (pointing out that

"process" has been broadly interpreted to include the entire range of procedures incident to

litigation)).) In light of the preceding authorities, the Court will assume-without deciding-that

Defendants' alleged discovery abuses constitute "process."

4. Whether Defendants' Alleged Discovery Abuses Were Carried out in a Manner Not Proper in the Regular Conduct of Proceedings

Bradbury, as discussed above, questioned whether allegedly false affidavits and

certifications in support of a motion for summary judgment constituted "process." (780

33 F.Supp.2d at 111 n.ll.) Ultimately, Bradbury determined that it need not reach that issue

because:

Even ifthe challenged affidavits and certificates used here are "process" their use in the Maine proceedings as alleged in the Amended Complaint does not satisfy Advanced Construction 's "improper" use requirement. They were used to win the foreclosure lawsuits, and that is a proper use of such documents. If they were false (false documents and testimony are a deep concern to any judge or court) then the proper remedy is to seek to vacate the judgment that was obtained, not to start a new lawsuit alleging abuse of process. A contrary ruling would mean that the outcome of every lawsuit could produce a later lawsuit by the unhappy loser, seeking damages on account of the outcome of the former lawsuit and claiming that it resulted from false testimony or false affidavits. For that same reason, Maine law accords an absolute privilege against liability in later lawsuits for 'statements made in the course of judicial proceedings."

(780 F.Supp.2d at 111 (footnote omitted).)

Here, viewing the facts in the light most favorable to First Tracks-which requires

assuming that Defendants purposefully framed Mr. Mason's affidavit to mislead First Tracks and

that Defendants improperly and intentionally withheld the 3/11/11 Appraisal-no reasonable

juror could find the alleged abuses were carried out in an improper manner. Instead, the alleged

abuses were carried out to further Ms. Merrill's interests in the House Foreclosure and

Deficiency suits.

Furthermore, First Tracks had an opportunity to raise these alleged abuses in the

Deficiency Suit, and seek sanctions or other appropriate remedies therein. Those remedies could

have included an award of counsel fees, the same fees which First Tracks seeks for damages in

this lawsuit. The Court did not find persuasive First Tracks' counsel's argument as to why

remedies, including an award of counsel fees, were not sought before the Single Justice who

handled the Deficiency Suit.

The Court has concluded that existing Maine law does not permit First Tracks to bring

these claims seeking a remedy it could have sought in the underlying action. As Bradbury notes,

34 a contrary ruling would mean that any unhappy litigant could always bring a subsequent lawsuit

alleging discovery abuses in a prior lawsuit, and would set a precedent that many courts have

been reluctant to encourage.

III. Conclusion

The Court concludes that Defendants are entitled to summary judgment on all six counts

of First Tracks' Complaint.

The entry will be: Defendants Motion for Summary Judgment is GRANTED.

Pursuant to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this Order by

reference in the docket.

Dated: September 8, 2014 Justice Michaela M Business and Consumer Court

Entered on the Docket:q•~./t( Copies sent via Maii_Eiectronically¥

35 First Tracks Investments, LLC v. Murray, Plumb & Murray, Kelly W. McDonald, Esq. and Christopher B. Branson, Esq.

BCD-CV-14-30

First Tracks Investments, LLC Petitioner I Plaintiff

Counsel: Thomas Hallett, Esq. 75 Market St., Suite 502 PO Box 7508 Portland, ME 04112-7508

Murray, Plumb & Murray, Kelly W. McDonald, Esq. and Christopher B. Branson, Esq. Respondents I Defendants

Counsel: Peter Detroy, Esq. Two Canal Plaza PO Box4600 Portland, ME 04112-4600