Federal National Mortgage Association v. Patricia W. Deschaine
170 A.3d 230
| Me. | 2017Background
- Patricia and Paul Deschaine executed a 2004 promissory note and mortgage; Fannie Mae later acquired the note and MERS recorded an assignment of the mortgage in 2011.
- Fannie Mae sent a notice of default in Sept. 2011, the Deschaines failed to cure, and Fannie Mae filed a foreclosure complaint in Dec. 2011 alleging acceleration of the full loan balance.
- The 2011 foreclosure was dismissed with prejudice for failure to comply with a court pretrial order; Fannie Mae did not appeal or seek post-judgment relief.
- In Dec. 2013 Fannie Mae filed a second foreclosure complaint on the same note and mortgage, alleging continued defaults; the Deschaines asserted res judicata and sought declaratory relief and quiet title.
- The Superior Court granted the Deschaines’ summary judgment motion, holding the 2013 action barred by res judicata because Fannie Mae had accelerated the debt in 2011; the court declared the property free of Fannie Mae’s mortgage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2013 foreclosure is barred by claim preclusion (res judicata) | Fannie Mae: dismissal with prejudice of 2011 was not an adjudication on the merits that bars a new foreclosure; any prior acceleration was not effective | Deschaines: 2011 complaint accelerated the entire debt, making the contract indivisible and barring a later foreclosure on the same debt | Court: Held barred — res judicata applies because same parties, final judgment, and same cause of action (acceleration occurred) |
| Whether Fannie Mae actually accelerated the debt in 2011 | Fannie Mae: acceleration language is permissive and was not effectively exercised; acceleration requires more than alleging it in a complaint | Deschaines: filing the foreclosure complaint and alleging acceleration constitutes exercise and notice of acceleration | Court: Held Fannie Mae did exercise optional acceleration by filing the 2011 foreclosure complaint alleging the full balance due |
| Whether acceleration requires a judicial foreclosure judgment to be effective | Fannie Mae: mortgage’s reinstatement clause means acceleration isn’t effective absent a foreclosure judgment; dismissal implies no default | Deschaines: acceleration is lender’s unilateral contractual right and is effective upon the lender’s valid exercise (e.g., filing suit) | Court: Held acceleration is unilateral and effective when exercised; dismissal sanction does not negate undisputed facts showing default and acceleration |
| Whether Johnson v. Samson remains controlling law | Fannie Mae: asks court to abandon Johnson and follow other jurisdictions that treat dismissal with prejudice as favorable adjudication for defendants | Deschaines: Johnson controls; allowing repeated foreclosures would permit piecemeal litigation by mortgagees | Court: Reaffirmed Johnson; refused to carve out exception for mortgagees and applied it to bar the 2013 action |
Key Cases Cited
- Johnson v. Samson Constr. Co., 704 A.2d 866 (Me. 1997) (acceleration of mortgage debt makes installment contract indivisible and bars subsequent foreclosure after dismissal with prejudice)
- Wilmington Tr. Co. v. Sullivan-Thorne, 81 A.3d 371 (Me. 2013) (standard for claim preclusion and discussion of when acceleration was not established)
- Bank of Am., N.A. v. Greenleaf, 96 A.3d 700 (Me. 2014) (assignment recorded by MERS conveyed only recordation authority; standing issues in foreclosure context)
- Green Tree Servicing, LLC v. Cope, 158 A.3d 931 (Me. 2017) (dismissal with prejudice as sanction is not an adjudication on merits in the sense of resolving underlying claim but has preclusive effect for res judicata purposes)
- Hebron Acad., Inc. v. Town of Hebron, 60 A.3d 774 (Me. 2013) (dismissal on procedural ground can be a decision on the merits for res judicata purposes)