Opinion
Civil Action RE-12-102
07-23-2015
NATIONSTAR MORTGAGE, LLC, Plaintiff v. TIMOTHY E. HALFACRE, Defendant
ORDER ON MOTION TO VACATE JUDGMENT AND TO DISMISS
Nancy Mills, Justice
Background
The first complaint for foreclosure filed against defendant Halfacre in June 2009 was dismissed without prejudice. RE-09-134. The second complaint for foreclosure filed in April 2012 resulted in a judgment entered on May 10, 2013 in favor of defendant after trial. RE-12-102. No appeal of the judgment was filed. The third complaint for foreclosure filed in January 2014 resulted in a judgment entered in favor of defendant on a motion for summary judgment, RE-14-047. Defendant's counterclaim in the third action remains pending.
Before the court is plaintiff's motion pursuant to Rules 60(b)(4) and 41(a)(2) to vacate the judgment in the second complaint. RE-12-102. Plaintiff argues it had no standing to commence the suit and the judgment is, therefore, void. A judgment is void when the court issuing the judgment lacks subject matter jurisdiction. See Coombs v. Governmental Employees, Ins. Co., 534 A.2d 676, 678 (Me. 1987); see also M.R. Civ. P. 60(b)(4).
Plaintiff relies on the court's determination that the notice of right to cure was defective to argue additionally that plaintiff never accelerated the note and, therefore, there could be no foreclosure. (See 5/10/13 Order 4.) Evidence of a "properly served notice of default and mortgagor's right to cure in compliance with statutory requirements" is an element of proof required to foreclose, Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700.
This court concluded after trial on the second complaint, "plaintiff has failed to prove by a preponderance of the evidence that it is entitled to judgment." (5/10/13 Order 5.) Neither standing nor subject matter jurisdiction was addressed during trial. Discussion
The Superior Court has subject matter jurisdiction over complaints for foreclosure. 4 M.R.S. §§ 105, 152(5)(H) (2014); 14 M.R.S. §§ 6321-6326 (2014). In Norris Family Assocs., LLC v. Town of Phippsburgh, which involved a Rule 80B appeal, the Law Court announced that standing and subject matter jurisdiction are separate issues and did not follow its prior approach of considering standing as an element of subject matter jurisdiction. 2005 ME 102, ¶¶ 12-13, 879 A.2d 1007.
Since Norris Family Assocs., LLC, however, the separation between standing and jurisdiction has not been maintained consistently. In Mortgage Elec. Registration Sys. v. Saunders, the Law Court did not cite authority, but concluded plaintiff "lacked standing to institute foreclosure proceedings and could not invoke the jurisdiction of our trial courts." 2010 ME 79, ¶ 15, 2 A.3d 289. The court in Saunders stated, "a party's personal stake in the litigation is evidenced by a particularized injury to the party's property, pecuniary, or personal rights, " and cited, among other cases, Stull v. First Am. Title Co. Saunders, 2010 ME 70, ¶ 7, 2 A.3d 289 (citing Stull, 2000 ME 21, ¶ 11, 745 A.2d 975). Stull provides that the issue of standing is jurisdictional and cites Singal v. Bangor. See Stull, 2000 ME 21, ¶ 11, 745 A.2d (citing Singal 440 A.2d 1048, 1050 (Me. 1982). In Singal, the Law Court treated a party's standing to appeal an administrative decision as being an element of the court's subject matter jurisdiction. 440 A.2d at 1050. The Court in Norris Family Assocs., LLC overruled this portion of Singal. 2005 ME 102, ¶ 13, 879 A.2d 1007.
In JP Morgan Chase Bank v. Harp, the Law Court stated, "standing relates to the court's subject matter jurisdiction and may be raised at any time, including during an appeal, " and cited Francis v. Dana-Cummings. Harp, 2011 ME 5, ¶ 7, 10 A.3d 718 (citing Francis, 2007 ME 16, ¶ 20, 915 A.2d 412). The paragraph in Francis cited in Harp provides, "a court may notice and act on a question regarding its authority at any time, either on its own or on motion of any party." Francis, 2007 ME 16, ¶ 20, 915 A.2d 412 (citations omitted). Francis involved a challenge to the court's subject matter jurisdiction under a specific statute and did not address the relationship between standing and subject matter jurisdiction. See id. ¶ 21.
Most recently, in Bank of Am., N.A. v. Greenleaf, the Law Court concluded that the bank lacked standing to seek foreclosure on a mortgage and accompanying note, but did not discuss jurisdiction. 2014 ME 89, ¶17, 96 A.3d 700. The court in Greenleaf did cite both Harp and Saunders. 2014 ME 89, ¶ 9, 96 A.3d 700
Notwithstanding the inconsistencies in the relationship between subject matter jurisdiction and standing, the Law Court has affirmed a judgment in favor of a defendant after trial when the plaintiff did not have standing. See Sturtevant v. Town of Winthrop 1999 ME 84, ¶¶ 1, 6, 23, 732 A.2d 264. In Sturtevant the Law Court affirmed the trial court's granting defendant's motion for a judgment notwithstanding the verdict based on defendant's argument that plaintiff lacked standing. Id. The Law Court also has vacated a judgment in favor of the plaintiff following a bench trial. Deutsche Bank Nat'l Trust Co. v. Wilk, 2013 ME 79, ¶¶ 1, 22, 76 A.3d 363. In Wilk, the Law Court vacated a judgment of foreclosure and remanded for entry of judgment in defendant's favor. See id. ¶¶ 1, 22. The Law Court determined plaintiff did not prove at trial that plaintiff owned the mortgage. Id.
Faced with this history, this court favors a judgment's finality over validity. The Law Court has stated, "[t]he more recent trend in the law is to favor finality over an absolute requirement of validity." Standish Tel. Co. v. Saco River Tel. & Tel. Co., 555 A.2d 478, 481 (Me. 1989)(citation omitted). In Standish, the Law Court determined that although a subsequent case clarified and limited the authority of the Public Utilities Commission (PUC), the PUC's order from 1938 was not appealed and had the effect of a judgment. See id. The Law Court relied on the Restatement (Second) of Tudgments (1982) to conclude the PUC's jurisdiction to enter the order, which was sought by the parties, was res judicata. See id. at 480-81. The favoring of "finality over an absolute requirement of validity, " discussed in Standish, is especially important in judgments affecting real estate.
If a court has subject matter jurisdiction, an unappealed judgment is valid and becomes res judicata. In Ervey v. Northeastern Log Homes, the Workers' Compensation Board nullified a 1986 unappealed decree of the Workers' Compensation Commission. 638 A.2d 709, 709-11 (Me. 1994). The Board determined the decree was null and void because the Commission had no authority to require defendant to pay plaintiff benefits. Id. at 710. The Law Court reversed and stated:
It is well established that a valid judgment entered by a court, if not appealed from, generally becomes res judicata and is not subject to later collateral attack. We have recognized a strong policy in favor of ending litigation and giving finality to court judgments. Balanced against a policy favoring finality, however, is a requirement that in order to become final, a judgment must be valid. The "validity" of a judgment depends upon whether a tribunal has subject matter jurisdiction and territorial jurisdiction and whether adequate notice has been afforded to a party.Ervey, 638 A.2d at 710-11 (internal quotation marks and citations omitted). Citing the Restatement (Second) of judgments, the Law Court determined "the subject matter of the action was [not] so plainly beyond the [Commission's] jurisdiction that its entertaining the action was a manifest abuse of authority." Id. at 711 (citing Restatement (Second) of Tudgments § 12(1) (1982)). Accordingly, the Law Court determined the Commission's decree was valid and entitled to res judicata effect. Id.
The Law Court noted also that there was no indication in the record defendant was prevented from appealing the 1986 decree. Instead, defendant waited seven years to attempt to invalidate the decree. See Ervey, 638 A.2d at 711-12.
Conclusion
Although the plaintiff lacked standing to prove that it was entitled to judgment on its second complaint for foreclosure, the lack of standing does not provide a basis to vacate an unappealed judgment for the defendant entered after trial in the Superior Court, This court's judgment is valid and entitled to res judicata effect.
The entry is
Plaintiff's Motion to Vacate Judgment and Dismiss Complaint without Prejudice is DENIED.