U.S. Bank National Association as Trsutee v. Charles Adams
102 A.3d 774
Me.
2014
Check Treatment

U.S. BANK NATIONAL ASSOCIATION as Trustee for Bear Stearns Asset Backed Securities 2006-AC2 v. Charles ADAMS et al.

Docket No. Han-13-589

Supreme Judicial Court of Maine

October 7, 2014

2014 ME 113

Argued: Sept. 10, 2014.

purpose of restoring the damages provision at section 3578(1)(C)(3) was that, without it, “the creditor pays more when the creditor is defrauded than when the creditor is not defrauded.” L.D. 695, Statement of Fact (115th Legis. 1991). This legislative history recognizes that a creditor whose claim against an asset is hindered or delayed by a fraudulent transfer must expend additional resources and energy to execute against or attach that asset. The damages authorized by section 3578(1)(C)(3) are thus intended to compensate the creditor for these additional expenses as well as for the underlying claim, but only to the extent of twice the value of the transferred asset.

[¶ 50] Finally, our conclusion that section 3578(1)(C)(3) authorizes the award of attorney fees incurred in the prosecution of an action for fraudulent transfer does not conflict with our prior recognition that “a statutory right to recover attorneys’ fees will be found only in the clearest kind of legislative language.” . In the context of the unique legislative history of section 3578(1)(C)(3), as well as the MFTA‘s broader purpose of remedying the effects of fraudulent transfers, “damages” must be construed to include the loss or injury to a creditor arising from the fraudulent transfer itself. Additionally, we reject the trusts’ contention that damages pursuant to section 3578(1)(C)(3) are permissible only when the asset has been placed beyond the reach of the court or has been reduced in value. Nothing in the plain language of section 3578(1)(C)(3) or its legislative history compels such a result.

[¶ 51] For these reasons, we vacate the court‘s award of damages against Raisin in the amount of $340,000 and remand for the court to make revised findings regarding KRZ‘s damages. All the other issues raised by Samsara and Raisin on appeal are resolved against them and the judgments are affirmed in all other respects.

The entry is:

The judgment entered in the Superior Court (Cumberland County, Cole, J.) is vacated and the case is remanded for a determination of damages with respect to Raisin and Samsara. The judgment entered in the Superior Court (Hancock County, A. Murray, J.) is affirmed.

Bradley M. Lown, Esq. (orally), Coughlin, Rainboth, Murphy & Lown, P.A., Portsmouth, New Hampshire, for appellant U.S. Bank National Association.

Thomas A. Cox, Esq. (orally), Portland, for appellees Charles and Dorothy Adams.

Panel: ALEXANDER, and SILVER, MEAD, GORMAN, JABAR, and HJELM, JJ.

GORMAN, J.

[¶ 1] U.S. Bank National Association as Trustee for Bear Stearns Asset Backed Securities 2006-AC2 appeals from a judgment of the Superior Court (Hancock County, A. Murray, J.) denying it an equitable lien on Charles Adams‘s portion of a property that he owns jointly with Dorothy Adams in Dedham. Because we conclude that the statute of limitations bars U.S. Bank‘s claim, we vacate the judgment and remand for entry of dismissal.

[¶ 2] In 2004, Charles Adams conveyed a portion of his parcel in Dedham to himself and his sister, Dorothy Adams, as joint tenants. On December 14, 2005, Dorothy executed a promissory note in the amount of $2,324,400 to American Brokers Conduit (ABC) and conveyed a mortgage on her interest in the property as security on the note. Although Charles was present at the closing, he did not sign the contested note and mortgage, and he expressed to the mortgage broker his refusal to be bound by their terms. Neither document makes any reference to Charles. In early 2008, Dorothy defaulted on the loan.

[¶ 3] On May 14, 2012, U.S. Bank1 filed a complaint against Charles seeking to place an equitable lien on Charles‘s interest in the property. U.S. Bank asserted that Charles had received a benefit as a result of his sister‘s decision to use the proceeds from the ABC loan to pay off an earlier loan for which she and Charles were jointly liable. In his answer and at trial, Charles asserted that the action was barred by the applicable statute of limitations. After a jury-waived trial, the court entered a judgment on the merits on November 1, 2013, in favor of Charles, concluding that U.S. Bank was not entitled to an equitable lien on Charles‘s interest in the property. U.S. Bank timely appeals from the court‘s denial of U.S. Bank‘s motion for reconsideration.

[¶ 4] Pursuant to 14 M.R.S. § 752 (2013) all civil actions, including equitable claims, must be commenced within six years after the cause of action accrues, unless another more particularized statute applies.2 . We have previously held that section 752 applies to unjust enrichment claims. See . The parties agree that the equitable lien claim was based on U.S. Bank‘s underlying unjust enrichment claim.

[¶ 5] This unjust enrichment claim accrued in December of 2005, the date on which Dorothy signed the contested note and mortgage to ABC, using some of the proceeds to pay off the earlier mortgage on the property she and her brother own. The complaint was not filed until May 14, 2012, which was more than six years later. Thus, the action should have been dismissed pursuant to section 752. See (vacating a judgment on the merits and remanding because the underlying claim was time-barred by the statute of limitations).

The entry is:

Judgment vacated and remanded for entry of dismissal.

Notes

1
U.S. Bank purports to have standing pursuant to a series of assignments from Mortgage Electronic Registration Systems, Inc. (MERS), as the lender‘s nominee for recordation. We recently clarified in , that standing to foreclose requires ownership of the mortgage. Although the standing requirements of the foreclosure statute do not apply to equitable lien cases, all plaintiffs must show standing to sue “no matter the causes of action asserted.” See id. ¶ 17. Nevertheless, the trial court did not evaluate whether U.S. Bank had standing to challenge Charles, and there is a sufficient basis for us to remand for dismissal on other grounds. See infra ¶ 5.
2
U.S. Bank argues that its equitable claims are based on the note and mortgage, which are subject to a statute of limitation pursuant to 14 M.R.S. § 751 (2013) (providing that personal actions on, inter alia, “the bills, notes, or other evidences of debt issued by a bank” must be commenced within twenty years after the cause of action accrues) and/or 11 M.R.S. § 3-1118 (2013) (providing, inter alia, a six-year statute of limitation from the accelerated due date on actions “to enforce the obligation of a party to pay a note“). Neither of these statutes of limitation applies here because U.S. Bank‘s cause of action involves an equitable claim against Charles‘s ownership interest in the Dedham property and is not an action to enforce the contested note.
Read the detailed case summary