Rockstone Capital v. Boyle

• Court: Superior Court of Maine
• Decided: June 7, 2013
• Docket: CUMre-11-457
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION DOCKET NO. RE-11-457 I 7JJvJ -- Cv.rn / ~,/:; :;Jc~" :_'_.~ I

ROCKSTONE CAPITAL LLC,

Plaintiff,

v. ORDER STATEOFMMIE_ WILLIAM BOYLE, et al., c~~, --- rc'lviffs oae Defendants. JUW 07 2013 RECEIVED Before the court is plaintiff Rockstone Capital LLC's motion for summary

judgment seeking to foreclose a mortgage which it holds on residential property

belonging to William and Carol Boyle. This motion was originally filed in March 2012

but was stayed by the Boyles' bankruptcy filing. The court was informed on April 4,

2013 that the Boyles' bankruptcy case had been dismissed.

In opposition to Rockstone's motion, William Boyle submitted a document

entitled "motion of William and Carol Boyle for summary judgement of dismissal." 1

Party in interest Kenneth Ray also opposed the motion and contends that he is the

assignee of a mortgage that has priority over the mortgage sought to be foreclosed by

Rocks tone.

Priority as between Rockstone Mortgage and Kenneth Ray Mortgage

As far as the court can tell, the facts bearing on the respective priorities of the

Rockstone mortgage and the Kenneth Ray mortgage are undisputed. William Boyle

1 William Boyle is not an attorney and therefore cannot represent Carol Boyle in this action. A pleading signed by William Boyle and not Carol Boyle applies only to William Boyle. personally guaranteed certain indebtedness of a company called Rainmaker Inc. I<~ ~ ~ ~ -l,.;t- ~.( ~ ~ Ro stone contend5 that it-*> the current owner and holder of the Rainmaker note and

has been assigned William Boyle's guaranty.

To further secure the Rainmaker indebtedness William and Carol Boyle executed

a mortgage to Rockstone covering property at 26 Orchard Road in Cumberland, Maine

in October 2009. Buland affidavit Ex. 7. That mortgage was recorded in the Cumberland

County Registry of Deeds on February 25, 2010 at Book 27612, page 320. Rockstone SMF

err 30 (admitted by Ray). 2 Ray does not dispute that Rainmaker and Boyle are in default

of the obligations secured by the Boyles' mortgage to Rockstone.

Ray's competing claim is derived from a mortgage executed by William Boyle to

Northeast Bank on December 4, 2008. That mortgage also covered 26 Orchard Road and

was recorded in the Cumberland County Registry of Deeds on February 6, 2009 at Book

26608, page 213. 3 Ray Affidavit err 2 and Ex. A. Ray is now the assignee of the Northeast

Bank mortgage. Ray Affidavit err 6 and Ex. C.

Rockstone does not dispute the facts set forth in Ray's affidavit. See Rockstone

Reply memorandum dated April 5, 2013 at 2. However, Rockstone notes that on

December 18, 2008 - after William Boyle executed the December 4, 2008 mortgage but

before that mortgage was recorded -Boyle conveyed 26 Orchard Road to himself and to

Carol Boyle in joint tenancy. Ray Affidavit Ex. B. That deed was recorded on December

26, 2008 in the Cumberland County Registry at Book 26518, page 150 - also before the

Northeast Bank mortgage was recorded. As a result, Rockstone contends, the Northeast

Bank mortgage held by Ray only has priority with respect to William Boyle's undivided

2 The February 25, 2010 date is found on the last page of Ex. 7 to the Buland Affidavit. 3 The date of recording is found on the last page of Ex. A to the Ray Affidavit.

2 one-half interest and that Carol Boyle's undivided one-half interest 1s subject to

Rockstone's mortgage recorded a year later.

The undisputed order of transactions and recording is as follows:

1. December 4, 2008 - William Boyle executes mortgage to Northeast Bank covering 26 Orchard Road at a time when he was the sole owner of that property. 4

2. December 18, 2008 - William Boyle executes deed conveying 26 Orchard Road to himself and Carol Boyle in joint tenancy.

3. December 26, 2008 -Deed from William Boyle to himself and Carol Boyle is recorded.

4. February 9, 2009 -Northeast Bank mortgage is recorded.

5. October 27 2009 - William and Carol Boyle execute mortgage to Rockstone covering 26 Orchard Road.

6. February 25, 2010- Rockstone mortgage is recorded.

In the court's view, when Rocks tone obtained and filed its mortgage, Rockstone

is not just charged with notice that a prior mortgage has been recorded that on its face

covered William Boyle's interest in the property but is also charged with knowledge of

the contents of that mortgage. See In re Morse, 30 B.R. 52 (1st Cir Bankruptcy Appellate

Panel1983); Hayden v. Joseph, 123 Me. 211, 122 A. 552 (1923) (where lease was recorded

and referred to in deed, purchaser held to have notice of the terms of the lease).

Thus, the Northeast Bank mortgage was available in the registry for Rocks tone to

review. If Rockstone had read that mortgage, it would have seen that the mortgage was

executed on December 4, 2008 - at a time when William Boyle was the sole record

owner of the property. At a minimum the Northeast Bank mortgage was sufficient to

put Rockstone on inquiry as to whether that mortgage, recorded prior to Rockstone' s

4 Ray Affidavit

3 mortgage, placed Rockstone in a secondary position as to the entire property. See In re

Morse, 30 B.R. at 55.

Accordingly, as between Rockstone and Kenneth Ray, Rockstone' s motion for

summary judgment is denied. Ray did not cross-move for summary judgment but on

this record Rockstone is only entitled to foreclose a mortgage interest that is subordinate

to the Northeast Bank mortgage held by Ray. As a practical matter, as discussed below,

this means that Rockstone is only entitled to foreclose the Boyles' right of redemption.

Argument Raised by William Boyle

William Boyle's "motion for summary judgement of dismissal," is based on the

contention that there is yet another mortgage, this one held by Evergreen Credit Union,

which is superior to Rockstone' s mortgage. Attached to Boyle's motion is a copy of a

mortgage to Evergreen Credit Union which appears to have been executed on March 22,

2004 and recorded on April 1, 2004. Although Boyle has not submitted an affidavit or a

certified copy of that mortgage, Rockstone does not disagree that the Evergreen

mortgage is superior to its mortgage. 5

Boyle contends that Rockstone was required to set forth the priorities of all the

other parties in interest and that the omission of Evergreen Credit Union is a basis for

denial of summary judgment and dismissal of the case. The court disagrees. In pertinent

part 14 M.R.S. § 6321 states as follows:

Parties in interest having a superior priority may not be joined nor will their interests be affected by the proceedings, but the resulting sale under section 6323 is of the defendant or mortgagor's equity of redemption only.

5 See Plaintiff's Reply Memorandum to Motion of William and Carol Boyle for Summary Judgment of Dismissal, dated April 5, 2012 at 2.

4 As a result, the failure to join Evergreen Credit Union does not affect Rockstone's

ability to proceed in this case. However, because Rockstone comes behind Evergreen

(and behind Kenneth Ray), it can only foreclose on the Boyles' equity of redemption.

Remaining Issues

Apart from their argument that Rockstone had failed to join Evergreen Credit

Union, the Boyles did not file a statement of material facts or any affidavits in

opposition to Rockstone' s motion for summary judgment. However, pursuant to Rule

56(j) the court is obliged to independently determine that the notice and service

requirements of 14 M.R.S. § 6111 and the Maine Rules of Civil Procedure have been

complied with, that Rockstone has properly certified ownership of the mortgage note

and produced evidence of the mortgage note and mortgage and all relevant

assignments and endorsements, and that mediation, when required, has been

completed.

The court finds from the summary judgment record and the court file that the

notice and service requirements of the Maine Rules of Civil Procedure have been

complied with and that mediation has been completed. Rockstone has also produced

evidence of its mortgage.

However, with respect to evidence of all assignments of the note, Rockstone' s

showing falls short. The note was originally given to Fleet Bank of Maine. Rockstone

has submitted evidence that the note was ultimately assigned to Rockstone by the Bank

of America, but the intermediate steps from Fleet Bank of Maine to Bank of America

have not been adequately covered.

While Rockstone has submitted a copy of an approval by the Comptroller of the

Currency for a merger of Fleet Bank of Maine into Fleet National Bank (certified to be a

5 true copy by Rockstone's attorney), it has not submitted evidence that the merger- once

approved- actually happened.

Rockstone has also submitted evidence of the approval of the acquisition of Fleet

National Bank, as a subsidiary of FleetBoston Corporation, by Bank of America.

However, it has not demonstrated by evidence admissible for purposes of summary

judgment that (1) the acquisition of Fleet National Bank was not just approved but

actually took place and (2) that, once Fleet National Bank was acquired by Bank of

America, Fleet National Bank either was merged into Bank of America or assigned the

note to Bank of America.

Rockstone has also demonstrated that it sent a notice of default complying with

14 M.R.S. § 6111 to the Boyles (Steigelman Ex. 1). However, under§ 6111(1) Rockstone

was not entitled to enforce its mortgage until 35 days after (1) the notice was received

by certified mail or (2) the post office last attempted to deliver the certified mail or (3)

the notice was sent by ordinary mail and was received by the Boyles. In the case of

ordinary mait Rockstone may conclusively prove receipt three days after a post office

certificate of mailing to the Boyles. See 14 M.R.S. §§ 6111(3)(A), 6111(3)(B).

Moreover, given that the notice of default stated that the Boyles had until July 11,

2011 to cure the default, notice arguably had to be given 35 days prior to July 11.

On this record Rockstone has not demonstrated when notice was given within

the meaning of § 6111. The summary judgment record does not contain evidence as to

when the post office last attempted delivery of the notices sent by certified mait 6 and

while the Steigelman affidavit certifies that the notice was also mailed by first class

mail, it does not say when that occurred and does not demonstrate that Steigelman has

6 Additional evidence of mailing may be attached to the complaint, but on summary judgment the court can only look to evidence referred to in the statements of material facts.

6 personal knowledge of the mailing. No post office certificate of mailing has been

submitted.

-- The court notes that Rockstone did not have to accelerate the debt because the

entire amount was already due, ~ut it still has to show that timely notice was give~

before it sought to enforce the mortgage by filing this action.

On issues relating to the assignment of the note and the receipt of the notice of

- default, the court will deny the motion or summary judgment without prejudice to

Rockstone's ability to renew its motion within 45 days upon a proper showing as to

- those issues. In this connection, Rockstone will not be required to refile a statement of

material facts except as to the specific issues on which its existing showing has been

found inadequate.

The entry shall be:

Plaintiff' motion for summary JU . gment is d nied to the exten that plaintili has asserted that plaintiff's mortgage is enti.Eled to riority over party-in-interes Kenneth Ray with respec to an undivide one- auinter t in e property. Plaintiff's motion for summary judgment is otherwise denied without prejudice. The Clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).

Dated: June l 2013

Thomas D. Warren Justice, Superior Court

7 ROCKSTONE CAPITAL LLC VS WILLIAM BOYLE ET AL UTN:AOCSsr -2011-0091892 CASE #:PORSC-RE-2011-00457

01 0000003895 NORTON TIMOTHY 53 EXCHANGE ST PO BOX 597 PORTLAND ME 04112-0597 F ROCKS TONE CAPITAL LLC PL RTND 09/16/2011

02 0000003453 WOLF ALAN PO BOX 1292 PORTLAND ME 04104 F KENNETH RAY PII RTND 10/25/2011 - 03 0000004672 STEIGELMAN, TIMOTHY E 53 EXCHANGE ST PO BOX 597 PORTLAND ME 04112-0597 F ROCKS TONE CAPITAL LLC PL RTND 09/16/2011