Knope v. Green Tree Servicing, LLC

Maine Superior

Knope v. Green Tree Servicing, LLC

Superior Court of Maine·Decided September 28, 2015·No. YORcv-14-102·Unpublished

Opinion

STATE OF MAJNE SUPERIOR COURT YORK, SS. CIVIL ACTION DOCKET NO. CV-14-102

WALTER KNOPE and DOROTHY KNOPE

Plaintiffs,

v. ORDER

GREEN TREE SERVICING, LLC,

Defendant

I. Background Plaintiffs Walter and Dorothy Knope ("the Knopes") brought this action against Green Tree Servicing, LLC ("Green Tree") seeking declaratory relief regarding a note and mortgage on their horne at 15 Hillside Drive, Eliot, Maine ("the Eliot property"). Plaintiffs seek a declaratory judgment stating how much they owe. The parties disagree as to the correct amount; the complaint alleged "charges for late fees and other charges that are not properly attributable to the Note and Mortgage." (Cornpl. ~ 12.)

Green 1 ree failed to answer the complaint and a default entered. The court denied Green Tree's motion to set aside the default on the grounds an "administrative error" did not constitute "good cause" under Rule 55(b )(2). A hearing was thereafter held to determine the proper payoff amount to bring the loan current, in particular, what

"charges" the Knopes alleged were "not properly attributable to the Note and Mortgage." 1 Prior to the hearing, the Knopes sold the Eliot property on May 29, 2015. By agreement, the Knopes paid Green Tree $338,892.45 on the condition that the sum would be reduced by c:.ny amount this court determined exceeded the correct amount due under the note and mcrtgage.

II. Discussion The Knopes concede Green Tree holds and owns the note~ and is entitled to at least $318,989.30. The Knopes argue, however, that certain fees assessed and added to the $338,892.45 total payoff amount generated by Green Tree derive from the mortgage and are therefore only recoverable by the entity that owns the mortgage. The Knopes argue Green Tree lacks authority to collect those fees because Green Tree's purported ownership interest comes from an assignment from Mortgage Electronic Registrations Systems, Inc. (\1ERS). See Bank of America, N.A. v. Greenleaf, 2014 ME 89, ~ 15, 96 A.3d 700.

MERS can only assign what it has, which under the terms of the mortgage here, as in Greenlea;: is merely the power to record the mortgage as nominee for the lender. 2 2014 ME 89, ~ 15, 96 A.3d 700. To possess a contractual right to recover fees paid for

1 The court reserved judgment on the Plaintiffs' impracticability theory. The court concludes that the defense of impracticability fails for the reasons stated in the order, in particular that the Knopes cannot avoid payment of properly assessed fees by asserting temporary impracticability. See Restatement (Second) ofContracts § 269. The only issue remaining is whether Green Tree may recover the fees sought.

2 Green Tree's argument that even if the assignment is defective:, it still qualifies as a "Lender" described in the mortgage is unavailing because the mortgage defmes a lender as an entity that takes ownership of both the note and the mortgage. See JPMorgan Chase Bank v. Harp, 2011 ME 5,1 9, 10 A.3d 718.

property taxes, insurance, and other fees accumulated in protecting the bank's security interest sought here, Green Tree must establish ownership of the mortgage.

GMAC was the original lender and owner of the Knopes mortgage. Green Tree would therefore need an assignment from GMAC or from a successor or assignee of GMAC to establish an ownership interest in the mortgage and thus have the right to collect fees assessed pursuant to the mortgage. The assignment from J\.1ERS did not effectively grart Green Tree those rights. See Greenleaf, 2014 ME 89, ~~ 15-17, 96 A.3d 700. Green Leaf therefore lacks contractual authority to enforce rights created by the mortgage. This does not, however, end the matter. Green Tree argues that even if it lacks an ownership interest in the mortgage and cannot contractually collect the fees, the court should nonetheless enforce the total payoff amount to avoid unjust ~~nrichment. 3 Unjust enrichment may be found where (1) the claimant conferred a benefit on the other party, (2) the other party knew or appreciated the benefit, and (3) the other party's retention of the benefit without compensating the claimant would be inequitable under the circumstances. Horton & McGehee, Maine Civil Remedies § 7.3 at 174 (4th ed. 2004). "To bring a case within the scope of the equitable doctrine of unjust enrichment, there must be :;orne specific legal principle or situation which equity has established or recognized." OceanNat'lBankv. Diment, 462 A.2d 35,38 (Me. 1983). "The retention of the property must be in violation of a duty that the law imposes." Id. at 39.

Green Tree conferred a benefit on the Knopes by paying for property taxes, insurance, and incurring other expenses during the time the Knopes were in default on the

3 The court would likely have adopted the Plaintiffs argument had the issue been only these amounts were owed by operation oflaw. However since the amounts have actually been paid by Greentree the court engages in the equitable analysis above.

loan. The Knopes knew and appreciated this benefit. The court concludes that to allow the Knopes to c.void payment for fees and expenses incurred by Green Tree in protecting the security interest in the Eliot property pursuant to the terms of the mortgage would be inequitable. Green Tree is entitled to the fees to avoid unjust enrichment. The payoff amount is correct; thus the Knopes are not entitled to any refund of the payoff sum.

The entry shall be:

Judgment for Defendant. Plaintiffs are not entitled to any refund of the $338,892.45 payoff amount.

SO ORDERED.

DATE: Septembe~015

John O'Neil, Jr.

Justice, Superior Court

ENTERED ON THE: DOCKET ON: qfgo/t~ I r

ALFSC-CV-2014-102

ATTORNEY FOR PLAINTIFFS: PATRICK BEDARD, ESQ. LAW OFFICE OF BEDARD & BOBROW 9 BRADSTREET LANE PO BOX 366 ELIOT, ME 03903

ATTORNEY FOR DEFENDANT: PRO HAC VICE RICHARD BRIANSKY, ESQ. MCCARTER & ENGLISH LLP 265 FRANKLIN STREET BOSTON, MA 02110-313

CATHERINE MOHAN, ESQ. MCCARTER & ENGLISH LLP CITYPLACE I - 185 ASYLUM STREET HARTFORD,CT06103

ENTERED DEC o 3 10141

STATE OF MAINE SUPERIOR COURT ,YORK, SS. CIVIL ACTION DOCKET NO. CV-14-102

JON-'/0 1\-{(-dtlr"/Lf

WALTER KNOPE and DOROTHY KNOPE

Plaintiffs,

v. ORDER

GREEN TREE SERVICING, LLC,

Defendant.

I. Background A. Procedural Posture

Plaintiffs Walter and Dorothy Knope ("the Knopes") brought this action against Green Tree Servicing, LLC ("Green Tree") seeking declaratory relief arising out a note and mortgage on their home at 15 Hillside Drive, Eliot, Maine ("the Eliot property"). Specifically, the Knopes demand an accounting 1 and a declaratory judgment stating how

1 The Knopes seek an accounting under 14 M.R.S. § 6301:

Any mortgagor or other person having a right to redeem lands mortgaged may demand of the mortgagee or person claiming under the mortgagee a. true account of the sum due on the mortgage, and of the rents and profits, and money expended in repairs and improvements, if any. If the mortgagee unreasonably refuses or neglects to render such an account in writing, or in any other way by default prevents the plaintiff from performing or tendering performance of the condition of the mortgage, the mortgagor may bring a civil action for the redemption of the mortgaged premises within the time limited in former section 6204, and therein offer to pay the sum found to be equitably due, or to perform any other condition, as the case may require. Such an offer has the same force as a tender of payment or performance before the commencement of the action. The action must be sustained without such a tender, and thereupon the mortgagor is entitled to judgment for redemption and costs.

much they owe on the mortgage. Prior to filing this action, the Knopes tried unsuccessfully to work out payment options with Green Tree.

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