US BANK TRUST NA AS TRUSTEE FOR LSF11 MASTER PARTICIPATION TRUST v. CUNNINGHAM
2:19-cv-00306
D. Me.Dec 2, 2019Background
- U.S. Bank Trust, N.A., as Trustee for LSF11 Master Participation Trust, filed a foreclosure complaint on July 1, 2019, against Aaron and Lisa Cunningham; Maine Revenue Services (MRS) and Maine DHHS were named parties-in-interest.
- Lisa Cunningham and Maine DHHS answered; Aaron Cunningham and MRS were entered in default.
- U.S. Bank moved to approve a Consent Judgment of Foreclosure and Sale; the proposed judgment was attached to the motion.
- The Court reviewed standing: U.S. Bank produced the original promissory note indorsed in blank (making it the holder) and a chain of assignments including a quitclaim from (Admirals) Domestic Bank to FNMA and an assignment from FNMA to U.S. Bank, supporting ownership of the mortgage.
- The Court concluded U.S. Bank has the required interest in both the note and mortgage (so it has standing) but identified multiple defects in the proposed consent judgment and in the pleading’s phrasing.
- The Court deferred approval and ordered U.S. Bank to submit a supplemental consent judgment within two weeks correcting a typographical principal amount, clarifying inclusion of attorney’s fees, specifying priority and amounts to parties-in-interest, providing a post-judgment interest rate, and distinguishing pre- vs. post-judgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Standing to enforce the promissory note | U.S. Bank is in possession of the original note indorsed in blank and is therefore the holder entitled to enforce it. | No substantive opposition (defaults entered); no successful dispute of possession. | U.S. Bank is the holder of the note and may enforce the debt. |
| 2) Ownership of the mortgage (assignment chain) | MERS assigned, then FNMA and finally U.S. Bank received assignments; plus a quitclaim from (Admirals) Domestic Bank to FNMA supports U.S. Bank’s ownership. | MERS cannot be a mortgagee under Maine law; a transfer traceable only to MERS would be invalid. | The quitclaim from (Admirals) Domestic Bank to FNMA, followed by FNMA’s assignment to U.S. Bank, supplies ownership; U.S. Bank has requisite mortgage interest. |
| 3) Sufficiency of the complaint’s remedy language (foreclosure v. foreclosure and sale) | Complaint demands a foreclosure; plaintiff implies a sale is encompassed. | Not argued; statute requires strict construction. | Court noted the complaint omits explicit demand for sale but, absent controlling authority deeming it fatal, will not deny approval on that ground. |
| 4) Deficiencies in the proposed consent judgment (amount, fees, priority, interest) | Proposed consent judgment submitted as drafted. | Parties-in-interest had not successfully objected; defaults as to some. | Court deferred approval and ordered supplemental consent judgment correcting the principal-amount typographical error, stating whether attorney’s fees are awarded, clarifying priority and distributions to parties-in-interest, specifying the post-judgment interest rate, and distinguishing pre- and post-judgment interest. |
Key Cases Cited
- Bank of Am., N.A. v. Greenleaf, 96 A.3d 700 (Me. 2014) (standing to foreclose requires interest in both the note and the mortgage)
- Mortg. Elec. Registration Sys., Inc. v. Saunders, 2 A.3d 289 (Me. 2010) (MERS does not qualify as a mortgagee under Maine foreclosure statute)
- Simansky v. Clark, 147 A. 205 (Me. 1929) (authority on enforcement/possession of negotiable instruments)
- Beal Bank USA v. New Century Mortg. Corp., 217 A.3d 731 (Me. 2019) (addressed issues related to note endorsements and enforcement)