MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 17
Docket: Sag-14-464
Argued: November 4, 2015
Decided: January 21, 2016
Panel: ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE
REGISTERED HOLDERS OF AEGIS ASSET BACKED SECURITIES TRUST
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-4
v.
CHRISTOPHER J. CURIT et al.
HUMPHREY, J.
[¶1] This appeal, another in a line of foreclosure cases in which the
purported mortgagee lacks standing, presents us with challenges to the trial court’s
initial judgment of dismissal with prejudice and its authority, pending this appeal,
to change that outcome to a dismissal without prejudice. We conclude that the
court reached a result that is correct but erred in the process used to achieve that
result.
[¶2] U.S. Bank1 filed a motion to dismiss its own foreclosure complaint,
without prejudice, because it lacked standing, and the District Court
1
The complete designation of U.S. Bank in this case and in the mortgage, which is the subject of this
foreclosure action, is “U.S. Bank National Association, as Trustee for the Registered Holders of Aegis
Asset Backed Securities Trust Mortgage Pass-Through Certificates, Series 2005-4.”
2
(West Bath, Field, J.) granted the motion but dismissed the action with prejudice.
M.R. Civ. P. 41(a)(2). The bank appealed that decision. While its appeal was
pending, the bank filed with the trial court a motion to correct or modify the
record, pursuant to M.R. App. P. 5(e). It asked the court to supplement the record
on appeal to reflect the court’s intention, expressed on the record during the
hearing on its motion to dismiss but not recited in the judgment, to allow the bank
to re-file a foreclosure action in the event of a future default if standing issues are
resolved. After a hearing on the bank’s Rule 5(e) motion, the court issued an order
changing the judgment of dismissal with prejudice to a dismissal without prejudice.
Christopher and Karen Curit, the mortgagors, cross-appeal from that order.
[¶3] Although the court correctly recognized that it erred when it dismissed
U.S. Bank’s action with prejudice, and that a dismissal without prejudice was the
proper result, it erred as a matter of law in the process used to achieve that result.
Accordingly, we vacate the judgments of dismissal with and without prejudice and
remand with instruction to dismiss U.S. Bank’s action without prejudice.
I. BACKGROUND
[¶4] The Curits executed a promissory note for the purchase of real property
in Freeport, Maine, in July 2005. The property was secured by a mortgage that
identified Aegis Lending Corporation as the “Lender” and Mortgage Electronic
Registration Systems, Inc. (“MERS”) as the “nominee for Lender and Lender’s
3
successors and assigns” for the purpose of recording the mortgage. On
August 23, 2007, MERS purported to assign the mortgage to U.S. Bank. On
September 1, 2012, the Curits defaulted on the mortgage.
[¶5] On March 13, 2013, the bank filed a complaint for foreclosure pursuant
to 14 M.R.S. § 6321 (2013). 2 The trial was originally scheduled for
August 13, 2014, but on July 23, 2014, following our decision in
Bank of America, N.A. v. Greenleaf (Greenleaf I), 2014 ME 89, 96 A.3d 700, the
bank filed an “emergency motion” to continue the bench trial. The court
(Dobson, J.) granted the motion and rescheduled the trial for October 14, 2014. A
week before the trial, the bank filed an “emergency motion” to voluntarily dismiss
the foreclosure action without prejudice, pursuant to M.R. Civ. P. 41(a)(2),3 on the
ground that it did “not wish to prosecute without further review as to the impact of
the Greenleaf decision.”
[¶6] On October 14, 2014, the court (Field, J.) held a hearing on the bank’s
motion to dismiss. The bank argued that it could not proceed with the foreclosure
because it did not have a mortgage assignment from the original lender, which had
2
This statute has since been amended to require that a “complaint must contain a certification of
proof of ownership of the mortgage note.” See P.L. 2015, ch. 229, § 1 (effective Oct. 15, 2015) (codified
at 14 M.R.S. § 6321 (2015)).
3
Maine Rule of Civil Procedure 41(a)(2) provides, in relevant part, that “an action shall not be
dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as
the court deems proper. . . . Unless otherwise specified in the order, a dismissal under this paragraph is
without prejudice.”
4
filed for bankruptcy over four years prior, and thus it did not have standing to
pursue the action. The Curits argued that the motion should be dismissed with
prejudice so that they could be awarded attorney fees pursuant to 14 M.R.S. § 6101
(2015). The bank countered that it preferred a dismissal without prejudice so there
would be no bar to re-filing a foreclosure action. The court stated that a dismissal
with prejudice “doesn’t mean [the bank] can’t come back. It just means they have
to file a new notice to quit signed by someone who has the authority to sign it and
then, start again.” Finding no “significant difference one way or the other,” the
court granted the bank’s motion, but dismissed the case with prejudice. During the
motion hearing, the court indicated on the record that it intended to allow the bank
to re-file a foreclosure complaint in the event of a future default if the standing
issue was resolved; however, the court did not include this statement in its written
decision. The bank filed a timely notice of appeal on October 31, 2014.
See 14 M.R.S. § 1901 (2015); M.R. App. P. 2.
[¶7] On January 7, 2015, while the bank’s appeal was pending before us,
the bank filed with the trial court a motion to correct or modify the record on
appeal, pursuant to M.R. App. P. 5(e), asserting that the court unintentionally
omitted from its judgment of dismissal “with prejudice” language indicating an
intention to allow the bank to re-file. At the motion hearing on February 11, 2015,
the bank argued that, pursuant to our decision in Johnson v. Sampson Construction
5
Corp., 1997 ME 220, ¶ 8, 704 A.2d 866, a dismissal with prejudice of a foreclosure
action on an accelerated debt barred a later action and was res judicata as to the
entire debt.
[¶8] On February 13, 2015, the court issued a “correction of the record”
order, stating that there was a discrepancy between what the court “enunciated on
the record as its finding and the end result.” The court acknowledged that it was
“unaware of the teachings of Johnson v. Sampson Construction Company” and
thus was unaware that a dismissal with prejudice would bar all future action on the
note. The court ordered that “the record be corrected to note that the dismissal of
Plaintiff’s action on 14 October, 2014 is WITHOUT PREJUDICE.” The Curits
timely cross-appealed from this order. See 14 M.R.S. § 1901; M.R. App. P. 2.
II. DISCUSSION
A. The Bank’s Appeal from Initial Dismissal With Prejudice
[¶9] While this lawsuit was pending, the bank filed a motion to dismiss the
action without prejudice because it had not yet been able to reach behind MERS
and acquire an assignment of the mortgage from the original lender, and thus
recognized that it did not have standing to bring this action against the Curits.4 On
4
Since 2010, we have made clear that MERS, as “nominee” for the lender for the purpose of
recording the mortgage, does not have any enforceable right in the debt that secures the mortgage and
thus cannot foreclose upon the mortgage, Mortg. Elec. Registration Sys., Inc. v. Saunders, 2010 ME 79,
¶¶ 15, 26, 2 A.3d 289; MERS can only assign the right to record the mortgage and cannot assign
6
appeal, the bank argues that the trial court abused its discretion when it granted the
motion, but dismissed the action with prejudice, because the court did not
understand the law applicable to the exercise of its discretion, as demonstrated by
the court’s admission that it was “unaware of the teachings” of
Johnson v. Sampson Construction Corp. See State v. Bickart, 2009 ME 7, ¶ 15,
963 A.2d 183.
[¶10] Ordinarily, we review a court’s dismissal of an action with prejudice
for abuse of discretion. U.S. Bank Nat’l Ass’n v. Manning, 2014 ME 96, ¶ 12,
97 A.3d 605. Here, however, we need not conduct this analysis. The trial court
did not have the discretion to dismiss the action with prejudice because the bank
had not received an assignment from the original lender, and a court may not rule
on the merits of a claim if the plaintiff does not have standing to bring the
complaint.5 See Bank of Am., N.A. v. Greenleaf (Greenleaf II), 2015 ME 127,
¶¶ 8-9, 124 A.3d 1122 (stating that a plaintiff’s lack of standing renders that
ownership of the mortgage, Bank of Am., N.A. v. Greenleaf (Greenleaf I), 2014 ME 89, ¶¶ 15-17,
96 A.3d 700.
5
This case is distinguishable from Wells Fargo Bank, N.A. v. White, 2015 ME 145, --- A.3d ---, in
which the trial court entered a final judgment of foreclosure and sale based on an agreed-to judgment
between the bank and White, the defendant-mortgagor. White later challenged the judgment in a
collateral attack, arguing that Wells Fargo did not have standing, and thus the judgment was void. Id. ¶ 4.
Favoring finality of the judgment in the particular circumstances of that case, we affirmed the trial court’s
denial of White’s motion for relief from judgment because White did not challenge the adequacy of Wells
Fargo’s interest in the mortgage, consented in writing to the entry of the judgment, and did not thereafter
appeal. Id. ¶¶ 9-13. Here, the bank recognized its lack of standing, did not consent to the court’s
adjudication on the merits, and timely appealed from the judgment dismissing its case with prejudice.
7
plaintiff’s complaint nonjusticiable); Johnson, 1997 ME 220, ¶ 8, 704 A.2d 866
(explaining that a dismissal of an action with prejudice is an adjudication on the
merits of a claim); see also Homeward Residential, Inc. v. Gregor, 2015 ME 108,
¶ 24, 122 A.3d 947 (stating that if the plaintiff does not have standing to proceed in
a foreclosure action, the court can dismiss the action only without prejudice). The
trial court demonstrated an implicit understanding of these principles when it
attempted to correct the outcome with its subsequent judgment of dismissal
without prejudice.
B. Curits’ Cross-Appeal from Subsequent Dismissal Without Prejudice
[¶11] In apparent recognition that the court could not modify its judgment
pending appeal, the bank’s draft order on its motion to correct or amend the record,
pursuant to M.R. App. P. 5(e), requested that the trial court “correct” its order to
dismiss the action “with prejudice but with leave to refile.” On appeal, the Curits
argue that the court misapplied the appellate rule and erred as a matter of law when
it granted the motion and issued its “correction of the record” order changing the
dismissal designation from “with prejudice” to “without prejudice.” We review
the interpretation of a court rule de novo. Brown v. Habrle, 2006 ME 115, ¶ 7,
908 A.2d 640.
[¶12] Trial courts may take no further action in civil cases pending the
disposition of an appeal to us, except as provided in, inter alia, M.R. App. P. 5(e),
8
which permits a trial court to “supplement the record to correct [an] omission or
misstatement” if any “difference arises as to whether the record on appeal truly
discloses what occurred in the trial court or if anything material to either party is
omitted from the record on appeal.” M.R. App. P. 3(b), 5(e).6
[¶13] Cases examining Rule 5(e), its predecessors, M.R. Civ. P. 74(e) and
76F(b), and the analogous federal rule, Fed. R. App. P. 10(e), illustrate that the
purpose of such a rule is to ensure that the record accurately reflects events that
occurred during the hearing or trial, “not to provide an opportunity for retroactive
alteration of those events.” 16A Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 3956.4 (4th ed. 2008); see Estate of Everett,
460 A.2d 1026, 1029 (Me. 1983) (stating that Rule 74(e) “is intended to provide a
mechanism for rectification of a properly settled record”);
Studiengesellschaft Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 134
(5th Cir. 1983) (holding that the district court was deprived of jurisdiction to
amend its order adding interest to an award after the notice of appeal had been
filed); United States v. Page, 661 F.2d 1080, 1082 (5th Cir. 1981) (“New
6
The full text of M.R. App. P. 5(e) is as follows:
Correction or Modification of Record. If any difference arises as to whether the record
on appeal truly discloses what occurred in the trial court or if anything material to either
party is omitted from the record on appeal, the trial court may on motion or suggestion,
after appropriate notice to the parties, supplement the record to correct the omission or
misstatement, or the Law Court may on motion or suggestion direct that a supplemental
record be transmitted by the trial court clerk. All other questions as to the content and
form of the record shall be presented to the Law Court.
9
proceedings of a substantive nature, designed to supply what might have been done
but was not, are beyond the reach of the rule.”); cf. Hickson v. Vescom Corp.,
2014 ME 27, ¶ 12, 87 A.3d 704 (permitting the parties to supplement the record
due to electronic recording/transcription inadequacies, pursuant to M.R.
App. P. 5(e)); Tisdale v. Rawson, 2003 ME 68, ¶ 14, 822 A.2d 1136 (disallowing
the admission of new evidence because it “was not entered to correct an omission,
misstatement, or other mistake affecting the record,” pursuant to former M.R.
Civ. P. 76F(b)); Popanz v. Peregrine Corp., 1998 ME 95, ¶ 7 n.4, 710 A.2d 250
(disallowing the addition of an entire document when only a section was part of the
record, pursuant to former M.R. Civ. P. 74(e)); Hayford v. Chesebrough
Ponds, Inc., 447 A.2d 480, 481 n.2 (Me. 1982) (stating that former M.R.
Civ. P. 74(e) was the proper rule under which to correct a clerical error).
Accordingly, Rule 5(e), which is directed to the correction or modification of the
trial court record, is not an appropriate mechanism for effectuating substantive
changes in the record or judgment during the pendency of an appeal.
[¶14] The court’s order on the bank’s motion to correct or modify was the
functional equivalent of a substantive change, not a correction, of the court’s
judgment because it converted a judgment that fully adjudicated the claim,
see Johnson, 1997 ME 220, ¶ 8, 704 A.2d 866, to a dismissal of the action without
10
addressing the merits. 7 Additionally, this error was not harmless because it
substantially affected the rights of the parties. See M.R. Civ. P. 61. Rule 5(e) was
not the appropriate avenue to accomplish such a result. Other means, if timely
sought, were available to the bank. The bank could have filed, for example, a
motion to alter or amend the judgment pursuant to M.R. Civ. P. 59(e), or a motion
to permit the District Court to act while the appeal is pending, M.R. App. P. 14(c)
(permitting suspension of the requirements or provisions of the appellate rules),
along with a motion for relief from judgment pursuant to M.R. Civ. P. 60(b).
However, the bank did not timely avail itself of these procedures.8
[¶15] The rules of civil and appellate procedure have a purpose and, while
they should not be construed or applied in a way that defeats the ends of justice or
does no more than promote form over substance,9 we must enforce them in a
consistent manner rather than engaging in case-specific deviations that create
7
In its Rule 5(e) motion and arguments at the hearing, the bank did not object to the court’s initial
entry of dismissal with prejudice. It was only concerned that the written decision did not include any
reference to the court’s remarks on the record that it would allow the bank to re-file a foreclosure action
in the event of a future default. However, the inclusion of those remarks would not have cured the legal
infirmity of the initial dismissal with prejudice. See Homeward Residential, Inc. v. Gregor,
2015 ME 108, ¶ 24, 122 A.3d 947.
8
The bank did file a motion to amend the judgment in the trial court, pursuant to M.R. Civ. P. 59(e),
on October 31, 2014, but it was untimely and not considered by the trial court.
9
See M.R. Civ. P. 1 (stating that the Rules of Civil Procedure “shall be construed to secure the just,
speedy and inexpensive determination of every action”); and M.R. App. P. 1 (stating that the Rules of
Appellate Procedure “shall be construed to secure the just, speedy, and inexpensive determination of
every appeal”).
11
confusion about their applicability. Although the trial court correctly determined
that the bank’s action should have been dismissed without prejudice, the court did
not have the authority, once the appeal had been filed, to change the substance of
its original judgment. Accordingly, we conclude that the court erred as a matter of
law in issuing its “correction of the record” order.
[¶16] Because the trial court erred in dismissing the bank’s action with
prejudice and did not have authority, pending this appeal, to change that outcome
to a dismissal without prejudice, we vacate both judgments and remand to the trial
court with instruction to dismiss the bank’s foreclosure action without prejudice.10
The entry is:
Judgment of dismissal with prejudice and
subsequent judgment of dismissal without
prejudice are vacated. Remanded for the entry of
judgment of dismissal without prejudice.
10
Because we vacate both of the trial court’s judgments of dismissal and remand for the entry of
dismissal without prejudice, we need not reach the Curits’ argument that the court abused its discretion by
failing to award attorney fees to the Curits as the “prevailing party.”
12
On the briefs:
David W. Merritt, Esq., and Andrew C. Feldman, Esq., Houser
& Allison, APC, Boston, Massachusetts, for appellant U.S.
Bank National Association
Joshua Klein-Golden, Esq., Clifford & Golden, PA, Lisbon
Falls, for cross-appellants Christopher and Karen Curit
At oral argument:
Andrew C. Feldman, Esq., for appellant U.S. Bank National
Association
Joshua Klein-Golden, Esq., for cross-appellants Christopher
and Karen Curit
West Bath District Court docket number RE-2013-29
FOR CLERK REFERENCE ONLY