Wells Fargo Bank, N.A. v. Kenneth Burek, 2013 ME 87

Background

In July 2010 Wells Fargo sued Kenneth and Shelley Burek for foreclosure, alleging default on a 2004 promissory note and mortgage originally made to Union Federal Bank of Indianapolis (UFBI).
Wells Fargo introduced into evidence the original note, mortgage, a 2009 loan modification, recorded assignments UFBI→MERS (2005) and MERS→Wells Fargo (2009), and a custodial file containing additional documents.
The custodial file also contained an unrecorded October 2004 assignment from UFBI to Fannie Mae that was not called to the court’s or parties’ attention until after judgment.
An allonge purporting to indorse the note to Wells Fargo was introduced but was not physically affixed to the original note; the trial court found Wells Fargo had not proven it was a “holder.”
The court nonetheless held Wells Fargo was entitled to enforce the note as a nonholder in possession with the rights of a holder under UCC § 3-1301, entered judgment of foreclosure, and awarded amounts due plus fees.
The Bureks moved post-judgment under M.R. Civ. P. 52 and 59(e) arguing (1) the unrecorded UFBI→Fannie Mae assignment undermined the chain of title and (2) Wells Fargo failed to prove its right to enforce the note; the court denied relief and the Bureks appealed.

Issues

Issue	Plaintiff's Argument (Bureks)	Defendant's Argument (Wells Fargo)	Held
Whether the unrecorded UFBI→Fannie Mae assignment required suppression or changed the court’s chain-of-title findings	Wells Fargo knew of and withheld the assignment; it undermines recorded chain UFBI→MERS→Wells Fargo	Assignment was part of Wells Fargo’s admitted custodial file; Bureks failed to rely on it at trial, so issue is unpreserved	Court acted within discretion to deny Rule 59(e); Bureks’ failure to raise it at trial precluded relief
Whether Wells Fargo proved right to enforce the note as a nonholder in possession under 11 M.R.S. § 3-1301	Allonge not affixed; no competent evidence of effective transfer/delivery to MERS or to Wells Fargo	Possession of original note, recorded assignments of mortgage that referenced the note, and loan modification support inference of transfer/delivery	Competent circumstantial evidence supported finding Wells Fargo was a nonholder in possession with rights of a holder; foreclosure judgment affirmed
Whether physical attachment of the allonge was required to prove holder status	Allonge not affixed, staple holes mismatch — so Wells Fargo not a holder	Allonge and note were kept together in the custodial file and other evidence shows transfers	Trial court found Wells Fargo was not proven a holder but correctly concluded it could enforce the note as a nonholder; appellate court affirmed
Whether trial court abused discretion in denying post-judgment motions (Rule 52 & 59)	Post-trial discovery of unrecorded assignment warranted new findings or amendment	Bureks failed to preserve the issue at trial; no withholding by Wells Fargo; denial within discretion	Denial of post-judgment motions was not an abuse of discretion

Key Cases Cited

Desmond v. Desmond, 45 A.3d 701 (Me. 2012) (standard of review for Rule 52 findings)
Ten Voters of Biddeford v. City of Biddeford, 822 A.2d 1196 (Me. 2003) (standard of review for Rule 59 motions)
Bank of America, N.A. v. Cloutier, 61 A.3d 1242 (Me. 2013) (foreclosure plaintiff must identify owner/economic beneficiary and prove power to enforce note)
KeyBank Nat’l Ass’n v. Sargent, 758 A.2d 528 (Me. 2000) (clear error review of factual findings in foreclosure)
Toomey v. Town of Frye Island, 943 A.2d 563 (Me. 2008) (questions of law reviewed de novo)
JPMorgan Chase Bank v. Harp, 10 A.3d 718 (Me. 2011) (linking foreclosure right to ability to enforce the note)
Mortg. Elec. Registration Sys., Inc. v. Saunders, 2 A.3d 289 (Me. 2010) (limitations on MERS’s authority when acting only as nominee)
FDIC v. Houde, 90 F.3d 600 (1st Cir. 1996) (possession without admissible proof of transfer insufficient to enforce a note)