STATE OF i\tlAINE BUSINESS AND CONSUMER COURT CUNIBERLAND, ss Location: Portland Docket No.: BCD-CV-14-64 I NICKERSON et al., ) ) Plaintiffs, ) ) v. ) ) ORDER ON DEFENDANT'S MOTION TD BANK, N.A., ) TO DISMISS ) Defendant. )
1. INTRODUCTION·
Before the Court is Defendant TD BANK, N.A. 's ("TD Bank") Motion to
Dismiss Plaintiffs' Complaint under Rule 12(b)(6) of the Mnine Rules of Civil Procedure.
Defendant makes two arguments in support of its motion. First, it argues that 33 M.R.S.
§ 551 ("Section 551 ") is pre-empted by federal law and regulations, specifically the
National Bank Act ("NBA") 12 U. S.C. §3 8 et seq., as weU as regulations promulgated by
the Office of the Comptroller of the Currency ("OCC"). The motion also argues that tile
allegations in the Compl11int contain insufficient specificity regarding when and/or if TD
Bank received the recorded mortgage release from the registry of deeds, and "merely
alleges threadb11re conclusions with a fonnulaic recitation of the elements" of the statute
allegedly violated. The Court will address the arguments separately.
ll. ANALYSIS
The Law Court has held that fedeml preemption may occur in several wnys:
Preemption occurs when Congress, in enacting a federal statute, expresses n clear intent to preempt state law, when there is an outright or ach1al conflict between federal and state law, where compliance with both federal and state law is in ef1'ect physically impossible, where there is implicit in federAl law a barrier to state regulation, where Congress has legislated comprehensively, thus occupying an entire field of regulation and leaving no room for the State to supplement federal law, or where the state law stnnds as (Ill obstacle to the accomplishment 11nd execution of the full objectives of Congress.
Me. Yankee Atomic Power Co. v. lv/e. Pub. Urils. Comm 'n, 581 A.2d 799, 802-03 (Me.
1990) (citing Cent. Me. Power Co. 11. Tow11 of Lebanon, 571 A.2d 1189 (Me. 1990)). In
relation to the NBA, the U.S. Supreme Court has held:
States are permitted to regulate the activities of national banks where doing so does not prevent or signifienntly interfere with the national bank's or the nationnl bank's regulator's exercise of its powers. But when state preseiptions signiticRnlly impair the exercise of authority, enumerated or incidental under the NBA, the State's regulations must give way.
Watters v. Waclwvia Bank, N.A., 550 U.S. I, 13 (2007) (citing Bamell Bank of Marion
Cmy. N.A. v. Nelson, 517 U.S. 25, 32-34 (1996).
The NBA enables national banks to engage in mortgage lending, subject to OCC
regulations, and tile Defendant relies upon a specific regtJlation that provides that the
national banks may make real estate loans without regard to state law limitations
concerning, among other things, the "processing, otigination, seJVicing, sale or purchase
of, or investment or participation in, mortgages .... " 12 C.F.R. § 34.4(a)(10).
Defend<~nt makes two arguments nbout preemption. First, it clnims that Section
551 is expressly preempted by the NBA, and that it creates conflict preemption with
federal law and regulations As to express preemption, Defendant argues that requiring
national banks to comply with Section 551 's requirements regarding the filing (at the
registry) and the mailing (to the lender) of the mortgage relense constitute "processing"
and "servicing" of mortgftges. Plaintiffs argu~ that Section 551 is not preempted because
2 it only has force of law after the lending relationship between mortgagor ftnclmortgngce
has ended. As Plaintiffs put it, "no mortgage exists anymore." (Pl.'s Opp. Mot. 4.)
Plaintiff.'> nlso direct the Court to two federal cases: Zink. v. First Niagra Bank,
N.A., 18 F. Supp. 3d 363, 366 (W.D.N.Y. 2014), and Adler ex rei. v. Bank of Am., N.A.,
2014 WL 3887224, at *4 (S.D.N.Y. JL1Iy 17, 2014) which fo\tnd no preemption of state
laws which imposed penalties on mortgagees who failed to present a certificate of
discharge for recording within a certain period of time. Defendant argues that Plaintiffs
misread these cases, nnd that they ilre inapposite to this case. Defendant points to
language in these decisions thnt indicates the decisions turned on the finding thnt the state
laws were not preempted becilusc they fell within the "Savings Clause" provision for
state laws "concerning the acquisition and transfer of real property." Zink, 18 F.Supp.Jd
at 3 70; Adler, 2014 WL 3 887224, at *4.
The Court disagrees with the Defendnnt's reading of these cnses. The cases
address what it means to "process" and "service" a mortgage under I2 C.F.R. §
34.4(a)(!O). While recognizing the limited legal authority on tllis issue, Zink squarely
held that because executing a release does not occur during the lifetime of a loan, it
cannot constitute processing or servicing a loan "because there is no longer a loan" to
service or process. link, 18 F. Supp. Jd at 370 (citing, Munoz v. Fin. Fi'eedom Senior
Funding C017J. 573 F. Supp.2d 1275, 1280 (C.D. Cal 2008). While Zink does address the
Savings Clause in 12 C.F.R. § 34.4(b), it did so in context of the conflict preemption
analysis. Both Zink and Adler stand for the proposition ~dvocilted here by Plaintiffs,
namely that there is no express preemption because state regulation of when a moztgage
discharge ll1l1St be ftled does not constitute "servicing" or "processing mortgages."
3 With respect to the conflict preemption argument made by Defendant, the ColJrt
11nds this argument unpersuasive. Defendnnt hils failed to ariiculate how requiring the
Defendant to comply with Section 55! would prevent or significantly limit the Bank's
exercise of its powers under the NBA, or has more than an "incidental effect" on
Defendnnt's lending practices. See Pinchol v. Charter One Bank, F.S.B., 792 N.E. 2d
1105, 1116(2003).
The Court concludes that Section 551 is not preempted by the NBA either lmder
express or conflict preemption.
B. Failure to PI end Suffici~nt Factunl Predicate
Tlte Defendaut makes the same argll!nent as that made by defendmlts in three
other related matters: Jonathan A. Quebbeman v. Bank of America. BCD-CV-15-0 I; Alec
t Sahi11a and Emma L. Sabina "· Wells Fargo. BCD-CV -14-26; and Alec T. Sabina cmd Emma L. .Sabina v. JP Morgan Chase. BCD-CV-14-61. On April 6, 2015, the Court
denied motions to dismiss in BCD-CV-1 S-0 1 and BCD-CV-14-26, and denied on April
13, 2015, the motion to dismiss in BCD-CV- !4-61. For the reasons stated in those orders
the Court wi!J likewise deny the motion to dismiss in this case. Plaintiffs here, as in the
other cases, have alleged facts incorporated into the langllage of a statute such that
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STATE OF i\tlAINE BUSINESS AND CONSUMER COURT CUNIBERLAND, ss Location: Portland Docket No.: BCD-CV-14-64 I NICKERSON et al., ) ) Plaintiffs, ) ) v. ) ) ORDER ON DEFENDANT'S MOTION TD BANK, N.A., ) TO DISMISS ) Defendant. )
1. INTRODUCTION·
Before the Court is Defendant TD BANK, N.A. 's ("TD Bank") Motion to
Dismiss Plaintiffs' Complaint under Rule 12(b)(6) of the Mnine Rules of Civil Procedure.
Defendant makes two arguments in support of its motion. First, it argues that 33 M.R.S.
§ 551 ("Section 551 ") is pre-empted by federal law and regulations, specifically the
National Bank Act ("NBA") 12 U. S.C. §3 8 et seq., as weU as regulations promulgated by
the Office of the Comptroller of the Currency ("OCC"). The motion also argues that tile
allegations in the Compl11int contain insufficient specificity regarding when and/or if TD
Bank received the recorded mortgage release from the registry of deeds, and "merely
alleges threadb11re conclusions with a fonnulaic recitation of the elements" of the statute
allegedly violated. The Court will address the arguments separately.
ll. ANALYSIS
The Law Court has held that fedeml preemption may occur in several wnys:
Preemption occurs when Congress, in enacting a federal statute, expresses n clear intent to preempt state law, when there is an outright or ach1al conflict between federal and state law, where compliance with both federal and state law is in ef1'ect physically impossible, where there is implicit in federAl law a barrier to state regulation, where Congress has legislated comprehensively, thus occupying an entire field of regulation and leaving no room for the State to supplement federal law, or where the state law stnnds as (Ill obstacle to the accomplishment 11nd execution of the full objectives of Congress.
Me. Yankee Atomic Power Co. v. lv/e. Pub. Urils. Comm 'n, 581 A.2d 799, 802-03 (Me.
1990) (citing Cent. Me. Power Co. 11. Tow11 of Lebanon, 571 A.2d 1189 (Me. 1990)). In
relation to the NBA, the U.S. Supreme Court has held:
States are permitted to regulate the activities of national banks where doing so does not prevent or signifienntly interfere with the national bank's or the nationnl bank's regulator's exercise of its powers. But when state preseiptions signiticRnlly impair the exercise of authority, enumerated or incidental under the NBA, the State's regulations must give way.
Watters v. Waclwvia Bank, N.A., 550 U.S. I, 13 (2007) (citing Bamell Bank of Marion
Cmy. N.A. v. Nelson, 517 U.S. 25, 32-34 (1996).
The NBA enables national banks to engage in mortgage lending, subject to OCC
regulations, and tile Defendant relies upon a specific regtJlation that provides that the
national banks may make real estate loans without regard to state law limitations
concerning, among other things, the "processing, otigination, seJVicing, sale or purchase
of, or investment or participation in, mortgages .... " 12 C.F.R. § 34.4(a)(10).
Defend<~nt makes two arguments nbout preemption. First, it clnims that Section
551 is expressly preempted by the NBA, and that it creates conflict preemption with
federal law and regulations As to express preemption, Defendant argues that requiring
national banks to comply with Section 551 's requirements regarding the filing (at the
registry) and the mailing (to the lender) of the mortgage relense constitute "processing"
and "servicing" of mortgftges. Plaintiffs argu~ that Section 551 is not preempted because
2 it only has force of law after the lending relationship between mortgagor ftnclmortgngce
has ended. As Plaintiffs put it, "no mortgage exists anymore." (Pl.'s Opp. Mot. 4.)
Plaintiff.'> nlso direct the Court to two federal cases: Zink. v. First Niagra Bank,
N.A., 18 F. Supp. 3d 363, 366 (W.D.N.Y. 2014), and Adler ex rei. v. Bank of Am., N.A.,
2014 WL 3887224, at *4 (S.D.N.Y. JL1Iy 17, 2014) which fo\tnd no preemption of state
laws which imposed penalties on mortgagees who failed to present a certificate of
discharge for recording within a certain period of time. Defendant argues that Plaintiffs
misread these cases, nnd that they ilre inapposite to this case. Defendant points to
language in these decisions thnt indicates the decisions turned on the finding thnt the state
laws were not preempted becilusc they fell within the "Savings Clause" provision for
state laws "concerning the acquisition and transfer of real property." Zink, 18 F.Supp.Jd
at 3 70; Adler, 2014 WL 3 887224, at *4.
The Court disagrees with the Defendnnt's reading of these cnses. The cases
address what it means to "process" and "service" a mortgage under I2 C.F.R. §
34.4(a)(!O). While recognizing the limited legal authority on tllis issue, Zink squarely
held that because executing a release does not occur during the lifetime of a loan, it
cannot constitute processing or servicing a loan "because there is no longer a loan" to
service or process. link, 18 F. Supp. Jd at 370 (citing, Munoz v. Fin. Fi'eedom Senior
Funding C017J. 573 F. Supp.2d 1275, 1280 (C.D. Cal 2008). While Zink does address the
Savings Clause in 12 C.F.R. § 34.4(b), it did so in context of the conflict preemption
analysis. Both Zink and Adler stand for the proposition ~dvocilted here by Plaintiffs,
namely that there is no express preemption because state regulation of when a moztgage
discharge ll1l1St be ftled does not constitute "servicing" or "processing mortgages."
3 With respect to the conflict preemption argument made by Defendant, the ColJrt
11nds this argument unpersuasive. Defendnnt hils failed to ariiculate how requiring the
Defendant to comply with Section 55! would prevent or significantly limit the Bank's
exercise of its powers under the NBA, or has more than an "incidental effect" on
Defendnnt's lending practices. See Pinchol v. Charter One Bank, F.S.B., 792 N.E. 2d
1105, 1116(2003).
The Court concludes that Section 551 is not preempted by the NBA either lmder
express or conflict preemption.
B. Failure to PI end Suffici~nt Factunl Predicate
Tlte Defendaut makes the same argll!nent as that made by defendmlts in three
other related matters: Jonathan A. Quebbeman v. Bank of America. BCD-CV-15-0 I; Alec
t Sahi11a and Emma L. Sabina "· Wells Fargo. BCD-CV -14-26; and Alec T. Sabina cmd Emma L. .Sabina v. JP Morgan Chase. BCD-CV-14-61. On April 6, 2015, the Court
denied motions to dismiss in BCD-CV-1 S-0 1 and BCD-CV-14-26, and denied on April
13, 2015, the motion to dismiss in BCD-CV- !4-61. For the reasons stated in those orders
the Court wi!J likewise deny the motion to dismiss in this case. Plaintiffs here, as in the
other cases, have alleged facts incorporated into the langllage of a statute such that
reference to the facts does simply recite the statutory language. There is case law
suggesting this is enough even under the federal pleading standard, which is genenllly
understood to be stricter than Maine's pleading standard. White v. G.C. SerFs. LP, 2012
WL 4747156, at *2 (D. Nev. Oct. 2, 2012). However, in order to ensure thnt the
defendants in these cases have fair notice as to how they allegedly violated Section 551,
the Court will require Plaintiffs in this case as well to provide more specificity as,to any
4 facts that it has in their possession as to whether the Registty of Deeds retumed the
original mortgage release to TD Bnnk, and if so when; and to provide more specificity as
to illly facts that it has in its possession as to when TD Dnnk mailed the original mortgage
release, or when (or if) Plnintiffs ever received it.
ill. CONCLUSION
THE ENTRY WILL BE: Defendant's Motion to Dismiss is DENIED. Plaintiffs
have 14 days from the date of this Order to provide further specificity as described in the
preceding pnragraph.
This Order may be noted on the docket by reference pursuant to Rule 79(a) of the
Maine Rules of Civil Procedure.
DATE M. 1\>lichneln Murphy, Justi lY. BUSINESS AND CONSUN • COURT
f·nterect on th Cop; eDocket: ~ ~:t' /~ es sent via Mail --{.LL~ __ etectronicatt - y~
5 Arlene W. Nickerson and Stanley M. Nickerson, on behalf of themselves and all others similarly situated v. TD Bank, N.A.
BCD-CV-2014-64
Arlene W. Nickerson and Stanley M. Nickerson, on behalf of themselves and all others similarly situated Plaintiff
Counsel: Peter Van Hemel, Esq. Meredith Eilers, Esq. Michael Bosse, Esq. Daniel Mitchell, Esq. 100 Middle Street PO Box 9729 Portland, ME 04104-5029
TD Bank, N.A. Defendant
Counsel: Emmy Monahan, Esq. 88 Hammond Street, Suite 500 Bangor, ME 04401 and Lauren Thomas, Esq. 4 77 Congress Street, 5th Floor Portland, ME 04101