Jackson Lumber & Millwork Co., Inc. v. Rockwell Homes, LLC

2022 ME 4, 266 A.3d 288

• Court: Supreme Judicial Court of Maine
• Decided: January 13, 2022
• Status: Published

Opinion

MAINE SUPREME JUDICIAL COURT Reporter of Decisions Decision: 2022 ME 4 Docket: Yor-21-144 Argued: December 9, 2021 Decided: January 13, 2022

Panel: STANFILL, C.J., and MEAD, GORMAN, JABAR, HUMPHREY, HORTON, and CONNORS, JJ.

JACKSON LUMBER & MILLWORK CO., INC.

v.

ROCKWELL HOMES, LLC, et al.

HUMPHREY, J.

[¶1] In ruling on a motion for approval of attachment and trustee process

filed by Jackson Lumber & Millwork Co., Inc., the Superior Court (York County,

Douglas, J.) concluded that because Jackson Lumber was both the mortgagee

and the “purchaser at the public sale” of foreclosed property in Lebanon, Maine,

the fair market value of that property as established by an independent

appraisal—not the value established by the highest bid at the public sale—was

used in determining the amount of any deficiency. 14 M.R.S. § 6203-E (2021).

Jackson Lumber appeals from the court’s denial of its motion for approval of

attachment and trustee process in the amount of $620,942.63 against the real

and personal property of mortgagor Rockwell Homes, LLC, and individual

guarantors Rock Bisson, Rock Bisson II, and Aaron Wiswell, arguing that the 2

court erred in treating Jackson Lumber as the “purchaser at the public sale” of

the property when it had assigned its rights under the purchase and sale

agreement to another entity and was not the party that received the deed.1 We

affirm the court’s order denying Jackson Lumber’s motion.

I. BACKGROUND

[¶2] The facts found by the court in reaching its decision are, except as

noted, supported by the affidavits and attached exhibits submitted in

conjunction with the motion for approval of attachment and trustee process.

See Libby O’Brien Kingsley & Champion, LLC v. Blanchard, 2015 ME 101, ¶ 5,

121 A.3d 109. In September 2017, Rockwell Homes borrowed $1,300,000 from

Jackson Lumber to acquire real property in Lebanon. The loan was secured by

a mortgage on the property, and Wiswell executed a promissory note on behalf

of Rockwell Homes. The note also included personal guaranties executed by

the Bissons and Wiswell. Rockwell Homes defaulted on the note in September

2018.

1Separately, the court approved attachment and trustee process against the real and personal property of Rock Bisson in the amount of $300,000 based on a separate line of credit that Bisson opened with Jackson Lumber on behalf of “Bisson Const” and personally guaranteed. That ruling is not challenged on appeal and will not be discussed further. The court also reached findings about a November 2018 promissory note and mortgage on property in Sanford, but the complaint did not allege a deficiency on that note or seek any recovery on it, and that note is not pertinent to our discussion here. 3

[¶3] In January 2019, the CEO and treasurer of Jackson Lumber sent

emails to Wiswell informing him that the balance due on the loan was

$1,041,026.95 and that an appraisal showed the Lebanon property against

which that debt was secured had an “as is” value of $1,100,000. In March 2019,

Jackson Lumber provided notice of default and demanded payment in full of all

amounts due on the note secured by the Lebanon property—the sum of

$1,070,918.37.2

[¶4] On April 22, 2019, acting pursuant to 14 M.R.S. § 6203-A (2021),

Jackson Lumber provided notice to Rockwell Homes, the Bissons, and Wiswell

of its intention to foreclose on the mortgage by public sale of the Lebanon

property on May 23, 2019. The public sale was conducted as scheduled, and

Jackson Lumber was the highest bidder at $550,000. Jackson Lumber executed

a purchase and sale agreement naming itself as both the seller and “Purchaser”

of the Lebanon property.

[¶5] On July 15, 2019, Jackson Lumber assigned its rights under the

purchase and sale agreement to Robert DiBerto in exchange for $600,000.

2 Although the court characterized the March 2019 communication as providing to the relevant mortgagors and guarantors a “Notice[] of Intention to Foreclose and Liability for Deficiency” as to the secured debt, that finding is erroneous. The March 2019 communication was a notice of default and demand for payment of the note secured by the mortgage on the Lebanon property; the notice of intention to foreclose and liability for deficiency as to the property followed in April. This erroneous but unchallenged factual finding does not affect the issue of statutory construction raised on appeal. 4

DiBerto then assigned his rights to Agamenticus Holdings, LLC, and on

August 15, 2019, Jackson Lumber conveyed the property to Agamenticus.

[¶6] Jackson Lumber filed a complaint in the Superior Court on

November 25, 2019, seeking monetary damages, attorney fees, and costs based

on claims for a deficiency judgment against Rockwell Homes and for

enforcement of the individual guaranties of the Bissons and Wiswell. Jackson

Lumber simultaneously moved for approval of attachment and trustee process

against all defendants. It filed a draft order and the affidavit of its chief

executive officer and treasurer, who authenticated and attached documentary

exhibits. All defendants opposed the motion for approval of attachment and

trustee process. Rock Bisson and Wiswell attached their own affidavits with

exhibits. Jackson Lumber filed a reply memorandum and a supplemental

affidavit from its CEO and treasurer.

[¶7] The court held a nontestimonial hearing in April 2021 and entered

an order denying the motion for approval of attachment and trustee process as

to the claims for deficiency against Rockwell Homes and for enforcement of the

guaranties of the Bissons and Wiswell on the mortgage note for the Lebanon

property. The court reasoned that Jackson Lumber had not established a

likelihood of success on the merits because when the mortgagee is the 5

“purchaser at the public sale” of the mortgaged premises, the amount of the

deficiency must be determined by comparing the amount owed with the fair

market value of the property at the time of the sale, as established by an

independent appraisal. 14 M.R.S. § 6203-E. The court regarded mortgagee

Jackson Lumber as the “purchaser at the public sale” and concluded that there

was no recoverable deficiency given that the appraised value of the Lebanon

property ($1,100,000) exceeded the amount owed by Rockwell Homes at the

time of the foreclosure ($1,070,918.37). Id.

[¶8] Jackson Lumber timely appealed from the denial of its motion for

approval of attachment and trustee process as to the claims for a deficiency

owed on the Lebanon property and for the enforcement of the individual

guaranties of the Bissons and Wiswell. See 14 M.R.S. § 1851 (2021); M.R.

App. P. 2B(c)(1); Sweeney v. Hope House, Inc., 656 A.2d 1215, 1216 (Me. 1995)

(“An order denying a motion for approval of attachment and trustee process is

immediately appealable as an exception to the final judgment rule.”).

II. DISCUSSION

[¶9] We review a decision to deny approval of attachment and trustee

process for an abuse of discretion or clear error. See Sweeney, 656 A.2d at 1216.

We will disturb the trial court’s findings based on the affidavits only if “the 6

affidavits contain no competent evidence to support the finding as to the

plaintiffs’ likelihood of success.” Blanchard, 2015 ME 101, ¶ 5, 121 A.3d 109

(quotation marks omitted).

[¶10] Issues of statutory interpretation are, however, reviewed de novo,

and the fundamental issue on appeal here is the interpretation of the term

“purchaser at the public sale” in 14 M.R.S. § 6203-E. See Fleet Nat’l Bank v.

Liberty, 2004 ME 36, ¶ 5, 845 A.2d 1183. In interpreting a statute, we “look to

the plain meaning of the statute, interpreting its language to avoid absurd,

illogical or inconsistent results and attempting to give all of its words meaning.”

Thurston v. Galvin, 2014 ME 76, ¶ 13, 94 A.3d 16 (quotation marks omitted). In

doing so, we view “the relevant provisions in the context of the entire statutory

scheme to generate a harmonious result.” Corinth Pellets, LLC v. Arch Specialty

Ins. Co., 2021 ME 10, ¶ 19, 246 A.3d 586 (quotation marks omitted). If a statute

is unambiguous, we interpret the statute directly without examining legislative

history; we “look to legislative history and other extraneous aids in

interpretation of a statute only when we have determined that the statute is

ambiguous,” meaning that it “is reasonably susceptible to different

interpretations.” Thurston, 2014 ME 76, ¶ 13, 94 A.3d 16 (quotation marks

omitted). 7

[¶11] The relevant paragraph of section 6203-E provides, “In the event

that the mortgagee is the purchaser at the public sale, any deficiency is limited

to the difference between the fair market value of the premises at the time of

the sale, as established by an independent appraisal, and the sum due the

mortgagee with interest plus the expenses incurred in making the sale.”

(Emphasis added.) This stands in contrast to the ordinary determination of a

deficiency by comparing the sale price with the sum owed to the mortgagee and

adding interest and expenses. See 14 M.R.S. § 6203-E; cf. 14 M.R.S. § 6323

(2021) (providing, in the statute governing public sales in foreclosures by civil

action,3 that “[a]ny rights of the mortgagee to a deficiency claim against the

mortgagors are limited to the amount established as of the date of the public

sale. The date of the public sale is the date on which bids are received to

establish the sales price, no matter when the sale is completed by the delivery

of the deed to the highest bidder.”).

3 Although we do not consider the pertinent language of 14 M.R.S. § 6203-E (2021) to be

ambiguous, we reference its legislative history in this footnote for the limited purpose of supporting our comparison of that provision with the law governing public sales in foreclosures by civil action. The language in 6203-E was proposed to establish a method for determining the deficiency that parallels the method employed for sales in foreclosures by civil action, 14 M.R.S. §§ 6323-6324 (2021). See An Act Regarding Maine’s Power of Sale Foreclosure Law: Hearing on L.D. 276 Before the J. Standing Comm. on Judiciary, 127th Legis. (2015) (testimony of Ben Marcus on behalf of the Maine Credit Union League). The language of section 6203-E, which tracks the language of section 6324, thus similarly serves as “a protection against a self-dealing mortgagee.” Peoples Sav. Bank v. Spencer, 482 A.2d 832, 834 (Me. 1984). 8

[¶12] Thus, when “(1) the mortgagee is the purchaser at the public sale

and (2) the mortgagee seeks a deficiency judgment,” the deficiency is

determined based on a comparison of the fair market value at the time of the

public sale, as established by an independent appraisal, with the amount owed

to the mortgagee. Key Bank of Me. v. Holman, 657 A.2d 775, 776 (Me. 1995)

(construing the comparable provision in the statute governing a public sale

ordered in a foreclosure by civil action). At issue here is whether Jackson

Lumber was the “purchaser at the public sale” even though it did not ultimately

acquire the property because it later assigned away its rights under the

purchase and sale agreement and never received the deed. 14 M.R.S. § 6203-E.

[¶13] The term “purchaser,” viewed in isolation, means “[s]omeone who

obtains property for money or other valuable consideration; a buyer.”

Purchaser, Black’s Law Dictionary (11th ed. 2019). The statutory term

“purchaser at the public sale” has its own meaning, however, based on its usage

in the statutory scheme. For instance, 14 M.R.S. § 6203-A(5) requires that a

purchase and sale agreement be executed “[a]t the completion of a public sale,”

after which the agreement “may be assigned by the purchaser.”4 (Emphasis

4Although a purchase and sale agreement need not be executed if the mortgagee is the successful bidder, Jackson Lumber did execute a purchase and sale agreement and then assigned its rights as the “Purchaser” of the property. See 14 M.R.S. § 6203-A(5) (2021). 9

added.) That the “purchaser” is authorized to assign the agreement suggests

that the successful bidder5 at the public sale is the “purchaser at the public sale.”

Id. § 6203-E; see also id. § 6203-A(5) (“A mortgagee may bid and may purchase

any real estate sold at such sale, as long as the mortgagee is the highest

bidder.”); cf. id. § 6323 (providing, in the statute governing public sales in

foreclosures by civil action, that “[t]he date of the public sale is the date on

which bids are received to establish the sales price, no matter when the sale is

completed by the delivery of the deed to the highest bidder”). Thus, the

assignee of the purchase and sale agreement may receive the deed even if it is

not “the purchaser at the public sale” and might not have even participated in

the public sale. Id. § 6203-E; see also 14 M.R.S. § 6324 (2021) (referring, in the

statute governing sales in foreclosures by civil action, to the real estate

“purchased by the highest bidder at the public sale” and a mortgagee that is “the

purchaser at the public sale”).

[¶14] Interpreting “purchaser at the public sale” to mean the successful

bidder at the public sale is supported by section 6203-E itself, which provides

for calculation of the deficiency based on the fair market value “at the time of

5 We use the term “successful bidder” because “[i]f the highest bidder fails to perform on the agreement, the foreclosing mortgagee may execute a purchase and sale agreement with the next highest bidder.” 14 M.R.S. § 6203-A(5). 10

the sale,” not the fair market value at the time that money or the deed changes

hands. This provision connects a mortgagee that is a “purchaser at the public

sale” with the value of the property at the time of that sale. See id. § 6203-E.

[¶15] Other statutes use the term “purchaser” rather than “purchaser at

the public sale” to describe the entity that ultimately receives the deed. For

instance, 14 M.R.S. § 6203-B (2021) requires the recording of an affidavit

memorializing the sale “within 30 days after the date of delivery of the deed to

the purchaser or the purchaser’s agent.” This statute notably does not describe

the purchaser as the “purchaser at the public sale.”6 Id. § 6203-E (emphasis

added). Similarly, 33 M.R.S. § 501-A (2021), which establishes the statutory

power of sale, uses the term “purchaser or purchasers” to describe the entity or

entities that receive the deed; again, the reference is not to a “purchaser at the

public sale,” 14 M.R.S. § 6203-E.

[¶16] The statutory scheme at issue therefore supports the trial court’s

determination: Jackson Lumber, which was the successful bidder at the public

sale and the buyer listed on the purchase and sale agreement of the Lebanon

6See also J. E. Keefe, Jr., Annotation, What constitutes a “public sale,” 4 A.L.R.2d 575, 575 (1949) (“Generally speaking, the term ‘public sale,’ as used in statutes . . . means a sale in which the public, upon proper notice, is invited to participate and give full opportunity to bid upon a competitive basis for the property placed on sale, which is sold to the highest bidder.”); Offredi v. Huhla, 60 A.2d 779, 781 (Conn. 1948) (“A ‘public sale’ is one made at auction to the highest bidder and at which all persons have a right to come in and bid.”). 11

property, was the “purchaser at the public sale” of that property. 14 M.R.S.

§ 6203-E. The Superior Court did not misinterpret the law and did not

otherwise err or abuse its discretion in denying the motion for approval of

attachment and trustee process as to the Lebanon property.

The entry is:

Order denying the motion for approval of attachment and trustee process related to the $1,300,000 promissory note affirmed.

Anthony J. Manhart, Esq. (orally), and Bodie B. Colwell, Esq., Preti Flaherty LLP, Portland, for appellant Jackson Lumber & Millwork, Co., Inc.

James F. Molleur, Esq., and Christopher J. Keach, Esq. (orally), Molleur Law Office, Saco, for appellees Rockwell Homes, LLC, Rock Bisson, and Rock Bisson II

Shea H. Watson, Esq. (orally), and Timothy H. Norton, Esq., Kelly Remmel & Zimmerman, Portland, for appellee Aaron Wiswell

York County Superior Court docket number CV-2019-261 FOR CLERK REFERENCE ONLY