Opinion
RE-17-75
01-25-2023
WELLS FARGO BANK, N.A., Plaintiff, v. DANIELLE L. KANE & CHELSEA KANE, PERSONAL REPRESENTATATIVE OF THE ESTATE OF JOSEPH J. KANE, Defendants, and, NEW DIMENSIONS FEDERAL CREDIT UNION, Party in Interest.
DECISION AND ORDER
DEBORAH P. CASHMAN JUSTICE.
Introduction
By amended complaint, Plaintiff Wells Fargo brings claims of Reformation of Mortgage (Count I) and Foreclosure of Mortgage (Count III) against Defendants Danielle Kane and Chelsea Kane, personal representative of the estate of Joseph J. Kane. Additionally, in Count II, Wells Fargo asserts a Quiet Title count against New Dimensions Federal Credit Union and seeks an order discharging New Dimensions' interest in property that is the subject of this foreclosure action.
A bench trial was held on September 23, 2022. Wells Fargo was represented by Attorney Andrew J. Schaefer and Defendant Danielle Kane was represented by Attorney Matthew J. Williams. Chelsea Kane and New Dimensions did not appear. Having considered the evidence presented at trial as well as the arguments of the parties, a decision is in order.
Background/Facts
Defendant Danielle Kane ("Danielle") acquired two adjoining parcels in Sidney, Maine through separate conveyances executed by her mother. The first parcel, deeded to Defendant Kane in 1998, included a residence ("the house lot"). Ex. L. And the second parcel, deeded in 2005, consisted of raw land with an orchard ("the orchard lot"). By quitclaim deed dated June 7, 2006, Danielle conveyed the orchard lot to herself and her then-husband, Joseph Kane ("Joseph").
Joseph has since passed away.
Also on June 7, 2006, Joseph obtained a residential loan from American Brokers Conduit ("ABC") by executing a Note in the amount of $130,000. Ex. A. To secure the loan, both Danielle and Joseph signed a mortgage in favor of ABC, with Mortgage Electronic Registration System, Inc. ("MERS") identified "solely as nominee for [ABC]." Ex. B. The mortgage conveyed property located at 3909 West River Road, Sidney, ME 04330, and the legal description of the property described the orchard lot only. Ex. B.
The court summarizes the subsequent assignments and events as follows:
• On June 14, 2011, Joseph entered into a Loan Modification Agreement with Wells Fargo, which was apparently servicing the loan by that point, Ex. F;
• On February 5, 2013, MERS, "as nominee for [ABC]" assigned the mortgage to Wells Fargo, Ex. D;
• On December 22, 2014, Joseph and Wells Fargo entered into a second Loan Modification Agreement, Ex. E;
• On February 23, 2017, ABC executed a quit claim assignment, purporting to "convey and assign any and all rights it [had] under the Mortgage" to Wells Fargo, Ex. D;
• On March 2, 2017, Wells Fargo Assigned the mortgage to Federal National Mortgage Association ("Fannie Mae"), Ex. D.
• On August 9, 2017, Wells Fargo sent a notice of default and right to cure letter to Joseph, Ex. H;
• On October 9, 2017, Fannie Mae, "by Wells Fargo ... as their attorney-in-fact," assigned the mortgage to Wells Fargo." Ex. D.
Wells Fargo initiated this Foreclosure action by complaint dated October 26, 2017. The court granted Wells Fargo's subsequent motions to amend the complaint, which, among other things, added the Reformation of Mortgage count against the Kanes as well as the Quiet Title count against New Dimensions.
At the outset of the September 23, 2022 bench trial-and over Wells Fargo's objections-the court granted Danielle's request to amend her answer to add a statute of limitations defense with respect to the Reformation of Mortgage count. The parties elected to proceed with the trial notwithstanding the court's ruling on Danielle's motion to amend her answer.
During trial, Wells Fargo submitted numerous exhibits into evidence and introduced the testimony of Brock Wiggins, a Senior Loan Documentation Specialist at Wells Fargo, as its witness qualified to testify about the business records of the various entities involved. Additionally, Danielle testified on behalf of the defense, explaining that she executed the mortgage with the understanding that she was encumbering the orchard lot only. Post-trial briefs were submitted by both parties thereafter.
Discussion
Foreclosure (Count III)
While the post-trial briefs raise multiple issues, the court need only address one: Whether Wells Fargo maintains the requisite interest in the mortgage to establish its standing to pursue a foreclosure action against Defendants.
"Every plaintiff seeking to file a lawsuit in the courts must establish its standing to sue, no matter the causes of action asserted." Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶ 7, 96 A.3d 700 (hereinafter "Greenleaf I”). Because standing is "'a threshold concept dealing with the necessity for the invocation of the [c]ourt's power to decide true disputes,' it is an issue cognizable at any stage of a legal proceeding, even after a completed trial." Bank of Am., N.A. v. Greenleaf, 2015 ME 127, ¶ 8, 124 A.3d 1122 (hereinafter" Greenleaf II”).
"Standing to foreclose involves the plaintiffs interest in both the note and the mortgage." Greenleaf I, 2014 ME 89, ¶ 9, 96 A.3d 700. As pertinent here, "the mortgage portion of the standing analysis requires the plaintiff to establish ownership of the mortgage." Id. ¶ 12 (emphasis original). Wells Fargo has failed to do so in this case.
While Wells Fargo has demonstrated an interest in the promissory note, its proof regarding the assignments of the mortgage is deficient. At issue is the October 9, 2017 transaction-the final link in the chain of assignments. On that date, Fannie Mae, "by Wells Fargo ... as their attorney-in-fact," assigned the mortgage to Wells Fargo."
Wells Fargo, however, did not introduce a power of attorney or other evidence demonstrating that it was authorized to execute the assignment on behalf of Fannie Mae. While it does not appear that the Law Court has addressed whether an assignment is effective under these circumstances, it generally noted in Greenleaf I that:
As in any matter, an agent has only those powers given to it by the owner. See, e.g., 18-A M.R.S. § 5-914(A)(3) (2013) (stating that an agent may "[a]ct only within the scope of authority granted [by the principal]."); J &E Air, Inc. v. State Tax Assessor, 2001 ME 95, ¶ 14, 773 A.2d 452 (noting that an agent is "continuous[ly] subject[ed] to the will of the principal"). Thus, an agent for the owner of the mortgage has the power to foreclose on behalf of the owner if the agent is given that power by the owner.Greenleaf I, 2014 ME 89, ¶ 12 n.8, 96 A.3d 700 (emphasis omitted). It therefore follows that the validity of an assignment executed by an agent depends on whether the owner gave the agent the power to assign the mortgage.
Moreover, at least two trial courts have suggested that where an assignment is executed by an attorney-in-fact, evidence of the agent's legal authority to execute the assignment is necessary-either in the form of a power attorney or other sufficient evidence. See, e.g., Carrington Mortg. Servs., LLC v. Gionest, No. 2:16-cv-00534-NT, 2020 U.S. Dist. LEXIS 47781, at *5 (D. Me. Mar. 19, 2020); U.S. Bank Nat'l Ass'n v. Carney, No. CARSC-RE-15-032, 2018 Me. Super. LEXIS 10, *5-9 (Jan. 16, 2018).
At trial, Wells Fargo failed to offer a power of attorney or other evidence demonstrating that it was vested with the authority to make assignments of the mortgage on Fannie Mae's behalf. Its evidence establishing a critical link in the chain of assignments is lacking. As such, the court concludes that Wells Fargo has failed to demonstrate that it owns the mortgage-a requisite component of standing to foreclose.
Wells Fargo contends that 33 M.R.S. § 353-A(3) excuses its deficiency in this regard. The court rejects this argument, even assuming the statute applies in this context. Indeed, 33 M.R.S.A. § 353-A(3) applies to "[a] corporation or other legal entity organized or attempted to be organized under the laws of this State for more than 20 years." Wells Fargo failed to present evidence demonstrating that it satisfies these criteria. Moreover, to the extent Wells Fargo argues that Danielle waived her challenge to the October 9, 2017 assignment, the court observes that Danielle's challenge goes to the issue of standing-a matter that can be raised at any time, even after trial. Greenleaf II, 2015 ME 127, ¶ 8, 124 A.3d 1122.
Reformation of Mortgage and Quiet Title (Counts I & II)
Absent sufficient proof of its ownership of the mortgage, Wells Fargo similarly lacks standing to pursue its claims of Reformation of Mortgage and Quiet Title.
The entry is:
Wells Fargo's claims of Reformation of Mortgage (Count I), Quiet Title (Count II), and Foreclosure of Mortgage (Count III) are dismissed without prejudice for lack of standing.
The Clerk shall enter this Order upon the docket by reference.