J.P. Morgan Mortgage Acquisition Corp. v. Camille J. Moulton

2024 ME 13

• Court: Supreme Judicial Court of Maine
• Decided: January 30, 2024
• Docket: Oxf-21-412
• Status: Published

Opinion

MAINE SUPREME JUDICIAL COURT Reporter of Decisions Decision: 2024 ME 13 Docket: Oxf-21-412 Argued: November 1, 2022 Decided: January 30, 2024

Panel: STANFILL, C.J., and MEAD, JABAR, HORTON, CONNORS, and LAWRENCE, JJ., and HUMPHREY, A.R.J. Majority: STANFILL, C.J., and JABAR, HORTON, CONNORS, and LAWRENCE, JJ. Dissent: MEAD, J., and HUMPHREY, A.R.J.

J.P. MORGAN MORTGAGE ACQUISITION CORP.

v.

CAMILLE J. MOULTON

JABAR, J.

[¶1] J.P. Morgan Mortgage Acquisition Corp. appeals from a decision of

the District Court (South Paris, Ham-Thompson, J.) granting Camille J. Moulton’s

motion for summary judgment on the ground that J.P. Morgan’s notice of

Moulton’s right to cure did not meet the requirements of 14 M.R.S. § 6111

(2023). We affirm the court’s conclusion regarding the defective notice but,

consistent with our decision in Finch v. U.S. Bank, N.A., 2024 ME 2, --- A.3d ---,

we vacate the portion of the judgment requiring J.P. Morgan to discharge the

mortgage. 2

I. BACKGROUND

[¶2] The following facts are supported by the summary judgment record

and presented in the light most favorable to J.P. Morgan as the nonprevailing

party. Lubar v. Connelly, 2014 ME 17, ¶ 4, 86 A.3d 642.

[¶3] Moulton owns real estate in Buckfield subject to a March 18, 2009,

mortgage, which secured payment of a $62,985 note. The real estate is

Moulton’s residence. The mortgage was executed in favor of Taylor, Bean

& Whitaker Mortgage Corp. and was assigned to J.P. Morgan on March 21, 2018.

Under the terms of the mortgage, when Moulton made a partial mortgage

payment, the monthly payment would remain outstanding and the partial

payment would be held in a suspense balance as a credit against the loan. The

suspense balance would be applied as a payment only when it was enough to

constitute a full payment, at which point it would be applied to the earliest

outstanding monthly payment.

[¶4] After writing a check dated November 18, 2016, for $720.00,

Moulton ceased making payments on the loan. The monthly payment due was

$742.54. At that point, Moulton had an existing suspense balance from prior

partial payments. Pursuant to the terms of the loan, $47.62 of the

November 18, 2016, payment was added to the suspense balance to make a full 3

payment for the oldest outstanding payment due, and the remaining amount of

the November 18 payment ($672.38) was held as a credit in suspense.

[¶5] J.P. Morgan sent Moulton a notice of default and right to cure on

November 22, 2018. When the notice was sent, the loan was in default for

failure to pay from October 2016 through November 2018. The notice provided

that “the total amount to cure the default is $20,930.04,” but also directed

Moulton to “refer to the attached Exhibit A for the itemized breakdown of the

total amount due.” Exhibit A’s itemized breakdown indicated $20,257.66 as the

total amount due following the application of the $672.38 that the bank had

been holding in suspense.

[¶6] On January 24, 2019, J.P. Morgan filed a complaint for foreclosure in

District Court. See 14 M.R.S. § 6321 (2023). Moulton answered and requested

mediation. Mediation was unsuccessful, and the matter was returned to the

docket on August 21, 2019. Prior to trial, the case was continued due to the

foreclosure moratorium under the CARES Act. See Coronavirus Aid, Relief, and

Economic Security Act, Pub. L. No. 116-136, § 4022(c)(2), 134 Stat. 281, 491

(2020). On August 23, 2021, J.P. Morgan filed a motion to dismiss its complaint

without prejudice pursuant to M.R. Civ. P. 41(a)(2). On September 13, Moulton 4

filed an opposition to the motion to dismiss and a motion for summary

judgment. J.P. Morgan opposed the motion for summary judgment.

[¶7] On November 24, 2021, the court denied J.P. Morgan’s motion to

dismiss. The court granted Moulton’s motion for summary judgment on the

ground that the right-to-cure notice was deficient because it failed to clearly

inform Moulton of the amount that she was required to pay to cure the default,

and thus Moulton was entitled to judgment as a matter of law. The court went

further, however, and declared that Moulton “holds title to the real property at

issue, unencumbered by the mortgage and promissory note.” The court also

awarded her reasonable attorney fees and costs.

[¶8] J.P. Morgan timely appealed the final judgment.1 M.R. App. P. 2B(c).

II. DISCUSSION

A. Standard of Review

[¶9] We review the trial court’s ruling on a motion for summary

judgment de novo, “considering the properly presented evidence and any

reasonable inferences that may be drawn therefrom in the light most favorable

to the nonprevailing party, in order to determine whether there is a genuine

1 J.P. Morgan did not raise, and we therefore do not address, any issue regarding the court’s denial

of its motion to dismiss. Nonetheless, we note that such dismissal would be appropriate, especially in light of Finch, 2024 ME 2, --- A.3d ---. 5

issue of material fact and whether [the] party is entitled to a judgment as a

matter of law.” Estate of Frost, 2016 ME 132, ¶ 15, 146 A.3d 118.

[¶10] “A plaintiff seeking a foreclosure judgment must comply strictly

with all steps required by statute.” Bank of Am., N.A. v. Greenleaf, 2014 ME 89,

¶ 18, 96 A.3d 700 (quotation marks omitted). To prevail in a foreclosure action

under 14 M.R.S. § 6321, the plaintiff must prove eight conditions, including

“properly served notice of default and mortgagor’s right to cure in compliance

with statutory requirements.” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700;

14 M.R.S. § 6321 (“The mortgagee shall further certify and provide evidence

that all steps mandated by law to provide notice to the mortgagor pursuant to

section 6111 were strictly performed.”).

B. Notice of Right to Cure

[¶11] The trial court did not err when it determined that the

right-to-cure notice was deficient because it did not clearly put Moulton on

notice of what was required of her to cure the default. See, e.g., Greenleaf, 2014

ME 89, ¶¶ 29-31, 96 A.3d 700 (vacating foreclosure judgment because notice of

default and right to cure specifying an amount to cure the default but also

instructing the mortgagor to contact the mortgagee for an updated

amount-to-cure figure was deficient); JPMorgan Chase Bank, N.A. v. Lowell, 6

2017 ME 32, ¶¶ 14-21, 156 A.3d 727 (holding that notice of default providing a

value for late monthly payments and an additional value for “advances” was

insufficient because the mortgagor would have to contact the mortgagee to

determine what the amount to cure was and because the amounts stated

indicated that the mortgagor was uncertain of the amount to cure); U.S. Bank

Trust, N.A. v. Jones, 330 F. Supp. 3d 530, 537-38 (D. Me. 2018) (holding that

notice containing an inaccurately inflated amount-to-cure is deficient when the

mortgagee included an item in the notice that “a reader could have interpreted

. . . as requiring a payment . . . more than that actually required to cure the

borrower’s default”). The notice itself overstated the amount required to cure

the default by $672.38, the amount that J.P. Morgan was holding in suspense.

J.P. Morgan thus failed to make a prima facie showing of strict compliance with

section 6111 and in turn could not prove an essential element of foreclosure.

See Wells Fargo Bank, N.A. v. Girouard, 2015 ME 116, ¶ 11, 123 A.3d 216.

[¶12] In Finch v. U.S. Bank, N.A., we held that where a lender has not

complied with the prerequisites to acceleration under section 6111, a court

cannot conclude that initiation of a foreclosure action nevertheless accelerates

the note balance. 2024 ME 2, ¶ 6, --- A.3d ---. Therefore, when a court enters

summary judgment against a lender or dismisses the lender’s foreclosure claim 7

due to a deficient notice of the right to cure under section 6111, the effect of the

judgment or dismissal of the claim is to preclude any future claim for the

outstanding balance due on the note as of the date of the judgment (unless the

lender has asserted a separate claim for the unaccelerated balance due). Id.

¶¶ 51-52. It does not preclude the lender from bringing a future foreclosure

claim based on a future default, nor does it discharge the entire mortgage or

effect a transfer of title. Id. ¶ 52.

[¶13] Although the judgment on the claim for foreclosure based on the

defective notice here is dispositive, we vacate that portion of the trial court’s

judgment “declaring that [Moulton] holds title to the real property at issue,

unencumbered by the mortgage and promissory note” on another ground.

There was no counterclaim for a declaratory judgment and thus no basis for the

court to go beyond entry of the judgment in favor of Moulton by declaring the

effect of its judgment. On a motion for summary judgment, the trial court could

either enter a judgment of foreclosure or enter a judgment in favor of the

defendant on the foreclosure complaint. Courts may not, however, opine on the

effect of a judgment, its enforcement, or other post-judgment matters absent a

specific cognizable claim for declaratory relief. 8

[¶14] We do not disturb the trial court’s award of reasonable attorney

fees for defending against the foreclosure claim given the deficient

right-to-cure notice. See id. ¶ 51 (“The court should ordinarily also consider

awarding attorney fees to the borrower pursuant to the applicable statute.”);

14 M.R.S. § 6101 (2023) (“If the mortgagee does not prevail, . . . the court may

order the mortgagee to pay the mortgagor’s reasonable court costs and

attorney’s fees incurred in defending against the foreclosure or any proceeding

within the foreclosure action . . . .”).

III. CONCLUSION

[¶15] Because we agree that the section 6111 notice was defective, we

affirm that portion of the judgment. We vacate the portion of the judgment

ordering discharge of the mortgage, however.

The entry is:

Portion of judgment ordering discharge of the mortgage is vacated. The remainder of the judgment is affirmed. 9

MEAD, J., with HUMPHREY, A.R.J., joins, dissenting.

[¶16] Although we agree with the Court’s observation that “[t]he trial

court did not err when it determined that the right-to-cure notice was deficient

because it did not clearly put Moulton on notice of what was required of her to

cure the default,” Court’s Opinion ¶ 11, we depart, as we did in the dissenting

opinion in Finch v. U.S. Bank, N.A., 2024 ME 2, ¶ 63, --- A.3d ---, from the Court’s

treatment of the consequences of a flawed notice of right to cure. We would

again conclude that the commencement of a foreclosure action seeking the

entire amount due constitutes an acceleration of the debt, and a judgment of

the trial court finding that the mortgagee has failed to satisfy one or more of the

statutory elements for foreclosure constitutes a final judgment on the merits

and bars relitigation of any matter related to the mortgage.

[¶17] We take this occasion, however, to point out that this case could

and should have been dismissed based upon a threshold issue that is apparent

on the summary judgment record—standing.

[¶18] When a defendant moves for summary judgment, a plaintiff

ordinarily “bears the burden of making out her prima facie case as to every

element.” Boivin v. Somatex, Inc., 2022 ME 44, ¶ 10 n.2, 279 A.3d 393.

Particularly here, where one required element of proof—ownership of the 10

mortgage—is necessary to establish the threshold issue of standing, the

obligation of a lender to make out a complete prima facie case is essential. See

Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶¶ 8, 17-18, 96 A.3d 700 (dismissing

a foreclosure complaint for lack of standing for failure to provide proof of

ownership of the note and mortgage and indicating that such proof is a

necessary element). Although a “plaintiff may, in certain instances, satisfy the

burden by putting forth prima facie evidence that establishes a genuine dispute

of material fact as to only those elements that are challenged by a defendant’s

factual or legal argument,” Boivin, 2022 ME 44, ¶ 10 n.2, 279 A.3d 393, this is

not a situation in which that rule should be applied. Cf. Corey v. Norman, Hanson

& DeTroy, 1999 ME 196, ¶ 9, 742 A.2d 933 (concluding that prima facie case as

to elements not challenged by the defendant could be assumed in an attorney

malpractice matter in which the plaintiff’s standing as a client was clear and

undisputed).

[¶19] Here, J.P. Morgan Mortgage Acquisition Corporation, in responding

to Moulton’s motion for summary judgment, failed to demonstrate its

ownership of the mortgage. It relied entirely on Moulton’s statement of

material fact regarding the existence of (1) a purported mortgage assignment

to J.P. Morgan by Mortgage Electronic Registration Systems, Inc. (MERS) and 11

(2) a purported quitclaim assignment from “Carrington Mortgage Services, LLC,

as attorney in fact for Government National Mortgage Association for Taylor,

Bean & Whitaker.” As the trial court explained in a footnote in its judgment,

neither of these documents—presented through Moulton’s affidavit “[o]n

information and belief”—established standing for two reasons. See Collins v.

State, 2000 ME 85, ¶ 5, 750 A.2d 1257 (stating that an issue of standing may be

raised by a court sua sponte because it is jurisdictional).

[¶20] First, the attempted assignment by MERS was fatally defective.

The language used in the document is identical to the language in Greenleaf,

2014 ME 89, ¶¶ 12-17, 96 A.3d 700, we deemed insufficient to effectuate an

assignment because MERS, the purported assignor, is a mere nominee for

purposes of recording a mortgage and is not the entity holding the assignable

interest in the mortgage.

[¶21] Second, the purported quitclaim assignment referenced in

J.P. Morgan’s statement of material facts is insufficient to demonstrate standing.

It was executed by a representative of “Carrington Mortgage Services, LLC, as

attorney in fact for Government National Mortgage Association for Taylor, Bean

& Whitaker.” Nothing in any of the statements of material facts or the

referenced exhibits demonstrates the existence or nature of the relationship 12

between Taylor, Bean & Whitaker—the original lender—and Government

National Mortgage Association. Nor do any statements or referenced exhibits

demonstrate that Carrington Mortgage Services, LLC, had the power of attorney

to act on behalf of Government National Mortgage Association “for” the original

lender.

[¶22] Rather than dismissing the foreclosure complaint based on the lack

of standing, the trial court here entered a summary judgment. When it did so,

it understood the existing case law to hold that the consequence of its judgment

would be akin to a dismissal with prejudice. See Pushard v. Bank of Am., N.A.,

2017 ME 230, ¶¶ 18-36, 175 A.3d 103; Fed. Nat’l Mortg. Ass’n v. Deschaine,

2017 ME 190, ¶ 37, 170 A.3d 230; see also Bank of N.Y. v. Dyer, 2016 ME 10,

¶ 11, 130 A.3d 966 (noting that a dismissal with prejudice operates as a ruling

on the merits). Deschaine and Pushard have now been overruled, however, see

Finch, 2024 ME 2, ¶ 51, --- A.3d ---, which makes it important for the Court to

clarify the proper procedural response when a plaintiff has not provided proof

of standing.2 See Dyer, 2016 ME 10, ¶ 11, 130 A.3d 966 (stating that a party that

We also disagree with the Court’s holding that a dismissal or summary judgment for the 2

borrower “due to deficient notice of right to cure” under 14 M.R.S. § 6111 (2023) precludes a plaintiff from bringing “any future claim for the outstanding balance due on the note as of the date of the judgment (unless the lender has asserted a separate claim for the balance due).” Court’s Opinion ¶ 12 (emphasis added). We continue to regard a summary judgment as a judgment on the merits on the 13

lacked standing “never had the rights necessary to get through the courthouse

door and pursue its claim in the first place” (alteration and quotation marks

omitted)). When a party lacks standing, a complaint should be dismissed

because the matter is not properly before the court for consideration on the

merits. See Bank of Am., N.A. v. Greenleaf, 2015 ME 127, ¶ 8, 124 A.3d 1122

(“A plaintiff’s lack of standing renders that plaintiff’s complaint

nonjusticiable—i.e., incapable of judicial resolution.”).

full amount due when a lender has accelerated a debt through a foreclosure action, see Finch v. U.S. Bank, N.A., 2024 ME 2, ¶ 63, --- A.3d --- (Hjelm, A.R.J., dissenting), and we regard such a judgment on the merits as having a preclusive effect, as explained in the dissenting opinion in Finch:

Not even seven years ago, in two separate but analytically related cases each decided unanimously, the Court held that a judgment entered against a mortgagee in a foreclosure action barred successive lawsuits seeking the same relief. See Pushard v. Bank of Am., N.A., 2017 ME 230, ¶¶ 4, 35-36, 175 A.3d 103 (where the judgment in the first proceeding was based, in part, on a deficient notice of default); Fed. Nat’l Mortg. Ass’n v. Deschaine, 2017 ME 190, ¶¶ 7, 37, 170 A.3d 230 (where the prior judgment was issued as a sanction for the plaintiff’s failure to comply with a pretrial procedural order). This conclusion is unremarkable because it treats mortgagees like any other claimant that had already sought relief but was unsuccessful—when a party loses its case through a final judgment arising from a failure of proof or some other reason that is dispositive, that party is barred from trying again. See U.S. Bank, N.A. v. Tannenbaum, 2015 ME 141, ¶¶ 6, 10, 126 A.3d 734. Today, the Court retreats from that principle. It does not do so because the law emanating from those cases has become antiquated. It does not do so because the law has changed. Rather, the Court does so simply because it now disagrees with the outcome of the cases we decided a short time ago.

2024 ME 2, ¶ 53, --- A.3d --- (Hjelm, A.R.J., dissenting). Here, however, there is no need for the majority to invoke Finch in any respect. We would not address the merits of the arguments regarding the adequacy of the notice provided under section 6111 because J.P. Morgan failed to show that it possesses the necessary interest in the mortgage to support its standing to foreclose, and the matter should be dismissed. 14

[¶23] The summary judgment entered here should therefore be vacated

and the matter remanded for the court to dismiss the complaint for lack of

standing. On remand, the trial court must determine whether the dismissal

should be with or without prejudice. See Green Tree Servicing, LLC v. Cope,

2017 ME 68, ¶ 18, 158 A.3d 931 (“[E]ven when a court is without power to

reach the merits of a complaint because the plaintiff lacks standing, the court is

not divested of its inherent authority to dismiss the complaint with prejudice

as a sanction for misconduct.” (citations omitted)).

William Fogel, Esq. (orally), and Santo Longo, Esq., Bendett & McHugh, P.C., Portland, for appellant J.P. Morgan Mortgage Acquisition Corp.

Kendall A. Ricker, Esq. (orally), Boothby, Silver & Ricker, LLC, Turner, for appellee Camille J. Moulton

Andrea Bopp Stark, Esq., National Consumer Law Center, Boston, Massachusetts, for amicus curiae National Consumer Law Center

Adam J. Shub, Esq., and Jonathan Mermin, Esq., Preti Flaherty Beliveau & Pachios LLP, Portland, for amicus curiae Maine Bankers Association

John Michael Ney, Jr., Esq., and Sonia J. Buck, Esq., Brock & Scott PLLC, Pawtucket, Rhode Island, for amicus curiae USFN — America’s Mortgage Banking Attorneys

Reneau J. Longoria, Esq., Doonan, Graves & Longoria LLC, Beverly, Massachusetts, for amicus curiae Doonan, Graves & Longoria LLC 15

Frank D’Alessandro, Esq., and Deborah Ibonwa, Esq., Maine Equal Justice, Augusta, for amicus curiae Maine Equal Justice

Adrianne E. Fouts, Esq., and Amy K. Olfene, Esq., Drummond Woodsum, Portland, and Marissa I. Delinks, Esq., Hinshaw & Culbertson LLP, Boston, Massachusetts, for amici curiae The Federal National Mortgage Association and The Federal Home Loan Mortgage Corporation

Jeremy Kamras, Esq., Arnold & Porter Kaye Scholer LLP, Washington, District of Columbia, for amicus curiae The Federal Housing Finance Agency

Daniel L. Cummings, Esq., Norman, Hanson & DeTroy, LLC, Portland, for amicus curiae Maine Credit Union League

Jonathan E. Selkowitz, Esq., Pine Tree Legal Assistance, Inc., Portland, for amicus curiae Pine Tree Legal Assistance, Inc.

South Paris District Court docket number RE-2019-2 FOR CLERK REFERENCE ONLY