Fraudclosure: FRT 2011-1 TRUST vs RODNEY POULIN – Void is Always Void Says Maine Court
This foreclosure action was before the court on March 16, 2016, for final hearing on Plaintiff FRT 2011-1 Trust’s Complaint for Foreclosure by Civil Action dated February 12, 2014, and served on Defendant Rodney Poulin on April 14, 2014.1 At the final hearing, Plaintiff was represented by John A. Doonan, Esq., and Defendant was represented by Thomas A. Cox, Esq. The parties stipulated to the admission of a portion of Plaintiffs exhibits; stipulated to submit written objections/argument and written responses/argument regarding Plaintiffs remaining exhibits; and stipulated that the court could decide the issues in this action “on the papers” after ruling on the admission of the disputed exhibits. Pursuant to the parties’ stipulations, the court admitted Plaintiffs Exhibit nos. 1, 2, 10 – 13, 15 – 17, and 19 into evidence. After review of the parties’ written objections and responses, the court admitted Plaintiffs Exhibit nos. 3-9 and 14 into evidence.
In its submission, Plaintiff conceded that the subject note and mortgage are held by separate entities. Nevertheless, citing the Uniform Commercial Code, 11 M.R.S. § 9-1203 (7), and Culhane v. Aurora Loan Servs. of Nebraska, 708 F.3d 282, 292 (1st Cir. 2013), Plaintiff asserted that the subject note in this matter was transferred to Plaintiff by both endorsement and delivery, therefore the mortgage also transferred to Plaintiff. Plaintiff further contends that in a title theory state, an equitable trust is implied by law, pursuant to which the title to the subject mortgage is held in trust by the holder of the note.
Because a mortgage note is a negotiable instrument, 11 M.R.S.§ 3-1104(1), the enforceability of the plaintiffs interest in the note is governed by Maine’s Uniform Commercial Code (U.C.C.), 11 M.R.S. § 3-1301. Wells Fargo Bank, NA. v. Burek, 2013 ME 87, ~ 18, 81 A.3d 330; see 11 M.R.S. § 1-1101(1). Section 3-1301 permits a party to enforce a note if it is the “holder” of the note. 11 M.R.S. § 1-1201(5), (2l)(a); 11 M.R.S. § 3-1301(1). However, the interest in the note is only part of the standing analysis, to be able to foreclose, a plaintiff must also show the requisite interest in the mortgage. Bank of America, NA. v. Greenleaf, 2014 ME 89, ~ 12. This means that to have standing to foreclose, after demonstrating an interest in the mortgage note, a plaintiff also must “establish ownership of the mortgage.” Id.
Under Maine’s foreclosure statute, “a mortgagee is a party that is entitled to enforce the debt obligation that is secured by a mortgage.” Mortgage Electronic Registration Systems, Inc. v. Saunders, 2010 ME 79, ~ 11,2 A.3d 289. In Saunders, Mortgage Electronic Registration Systems, Inc. (“MERS”) was not mentioned in the mortgage note; was described in the mortgage “solely as the ‘nominee’ to the lender;” was given only bare legal title for the purpose of recording the mortgage; had no beneficial rights in the mortgage; and had no covenants made in its favor. Id. at~ 10. Consequently, the Law Court determined that MERS as a nominee could not be considered a mortgagee under Maine’s foreclosure statute. Id. at~ 11; see also Greenleaf, 2014 ME 89, ~ 14, 96 A.3d 700. MERS could not assign a greater right than that which it possessed; therefore if MERS was not a mortgagee and, if it did not own the mortgage, it could not assign ownership of that mortgage to another party. Greenleaf, 2014 ME 89, ~ 16,96 A.3d 700. MERS could assign only the right to record the mortgage as nominee for the original lender.2 Id.
Standing may be assessed, determined and acted upon by the court at anytime, as it relates to the court’s subject matter jurisdiction. JPMorgan Chase Bank v. Harp, 2011 ME 5, ~ 7, 10 A.3d 718, 719; Saunders, 2010 ME 79, ~~ 15, 26,2 A.3d 289; see also M. R. Civ. P. 12(h)(3) (“[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action”). Moreover, a judgment entered by a court without subject matter jurisdiction is void. Boyer v. Boyer, 1999 ME 128, ~ 6, 736 A.2d 273 (citing Coombs v. Government Employees Ins. Co., 534 A.2d 676, 678 (Me. 1987)). However, if a plaintiffs lack of standing is cured before the defendant or the court questions it, then the foreclosure action may be maintained and prosecuted by that plaintiff. JPMorgan Chase Bank v. Harp, 2011 ME 5.
Defendant originally granted a mortgage to MERS as nominee for EquiFirst Corporation (Compl. ~ 6, Pl. Ex. 2.) MERS’s role is defined in the instant mortgage as it was in the mortgages considered in Saunders and Greenleaf Id. The mortgage then purportedly was assigned through various assignments commencing with an assignment from MERS to FCDB
SNPWL Trust dated June 3, 2011, and recorded in the Androscoggin County Registry of Deeds on June 13,2011 , in Book 8175, page 143 . (Compl. ~ 7, Pl. Ex. 3.) However, this assignment of mortgage served only to assign to FCDB SNPWL Trust, its successors and assigns, the right to record the mortgage on behalf of the original lender. Greenleaf, 2014 ME 89, ~ 16. The MERS interest in the mortgage was transferred to Plaintiff by assignment dated September 20, 2013, and recorded in the Androscoggin County Registry of Deeds on September 26, 2013, in Book 8782, page 269. 3 (Compl. ,-r 7, Pl. Ex. 4.) Based on the foregoing analysis, the court concludes that Plaintiff did not own the mortgage and therefore lacked standing to foreclose when it commenced this action on February 14, 2014.
Plaintiff contends the Ratification of Assignment dated February 27, 2015, and executed by EquiFirst cures its lack of standing. (Pl. Ex. 5.) Plaintiff believes the Ratification of Assignment resolves its standing problem by way of EquiFirst confirming retroactively that MERS had the authority to transfer of all of its rights as the original lender to a successor entity, notwithstanding the express language of the June 3, 2011 assignment. Plaintiff relies heavily on the fact that this type of instrument had not been considered by the Law Court and was distinguishable from the [assignments] under consideration in Saunders and Greenleaf Plaintiff, however, fails to cite any specific legal authority regarding the efficacy of retrospectively trying to recast the original transaction by employing self-serving language.
For the reasons cited above, the court believes the putative transfer of ownership of the subject mortgage to FCDB SNPWL Trust through the June 3, 2011 assignment was a nullity, without legal effect, a void transaction. A void transaction is not susceptible to validation or ratification, Yvanova v. New Century Mortgage Corp., 62 Cal. 4th 919; 365 P.3d 845; 199 Cal. Rptr. 3d 66 (Cal. 2016). See also Culhane, 708 F.3d at 291 (a challenge to an assignment from MERS [as nominee] is premised on the notion that MERS never properly held the mortgage, and, thus, had no interest to assign, in which case the assignment would be void (not merely voidable)). Absent legal support for Plaintiffs claims about operation of the Ratification of Assignment, the court concludes that the transfer of ownership of the mortgage from MERS to FCDB SNPWL Trust remains a nullity.
The Ratification of Assignment also contained language whereby EquiFirst expressly granted and conveyed its rights as lender under the subject mortgage to MERS. Curiously, Plaintiff insisted that this portion of the instrument was not a transfer of ownership, but nonetheless somehow transmuted the legal effect of the loan documents retroactive to the original date of the mortgage. (Pl. Ex. 5.) Again, Plaintiff failed to cite any specific legal authority supporting this contention. Absent legal support for Plaintiffs claims about the operation of the Ratification of Assignment, the court believes that this instrument reasonably can be construed to effectuate a transfer of EquiFirst’s rights under the mortgage as lender to MERS as of February 27,2015. Cf Wells Fargo Bank, NA., Burek, 2013 ME 87, ,-r21 & n. 7.4
Based on the court’s finding in the preceding paragraph, the doctrine of estoppel by after acquired property potentially could resolve Plaintiff’s standing issue. The doctrine provides that if a grantor purports to convey to a grantee real property that he does not own at that time, if the grantor subsequently acquires title to that property, this after-acquired title to the property inures to the benefit of the grantee, provided the conveyance was made with warranty covenants. Deutsche Bank Nat’! Trust Co. v. Wilk, 2013 ME 79 ~ 19, 76 A.3d 363. When a grantor conveys real property without warranty covenants, however, an after-acquired title will not inure or be transferred to the grantee. In the instant matter, the doctrine does not pertain. The June 3, 2011 assignment from MERS to FCDB SNPWL did not contain warranty covenants by MERS. (Pl. Ex. 3.) Therefore, any after-acquired title that might be asserted based on EquiFirst’s conveyance to MERS by means of the Ratification of Assignment would not inure to FCDB SNPWL and, thus, ownership of the mortgage was not transferred to FCDB SNPWL or any subsequent assignee. See Wilk, 2013 ME 79 at~ 19. Consequently, as of the time of hearing, the court finds that MERS continued to own the mortgage and neither Plaintiff nor any subsequent assignee had standing to bring and maintain this foreclosure action. See id. at~~ 19, 20.5
In light of the foregoing discussion, the court concludes that Plaintiff currently does not have standing to prosecute this foreclosure action.6 Accordingly, it is hereby ORDERED that this action for foreclosure is dismissed without prejudice.7 Homeward Residential, Inc., v. Gregor, 2015 ME 108, ~ 24.
h/t – O.M.G