WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR MFRA TRUST 2014-2 v. LISA BERRY
Aro-19-435
MAINE SUPREME JUDICIAL COURT
July 2, 2020
2020 ME 95
HUMPHREY, J.
Submitted On Briefs: May 12, 2020. Panel: MEAD, GORMAN, JABAR, HUMPHREY, and HORTON JJ. Reporter of Decisions.
HUMPHREY,
[¶1] Wilmington Trust, National Association, as Trustee for MFRA Trust 2014-2 (Wilmington), appeals from a judgment entered by the District Court (Fort Kent, Soucy, J.) in favor of Lisa Berry following a bench trial on Wilmington‘s complaint for foreclosure. Wilmington argues that the court erred by excluding evidence of business records showing Berry‘s payment history with various loan servicers, see
A. Foreclosure Complaint and Trial
[¶2] On February 16, 2018, Wilmington filed a complaint for foreclosure, alleging that Berry was in default for failing to make payments since May 1, 2015, and that she owed $73,508.08.2
[¶3] On March 20, 2019, the court held a one-day bench trial on Wilmington‘s complaint. At trial, Wilmington sought to admit in evidence business records purporting to show Berry‘s payment history with various loan servicers, including, in relevant part, Ditech Financial (formerly Green Tree Servicing) and Fay Servicing, LLC, the current servicer of Berry‘s loan. To support the admission of these records, Wilmington presented testimony from an employee who worked for these loan servicers and who was familiar with each entity‘s record keeping practices. However, Berry objected to the admission of the business records because the records also contained a reference to a separate loan servicer, “Marix Servicing, LLC.” Although the records indicated that Marix may have serviced Berry‘s loan in December 2016, an employee of Fay Servicing testified that he had no knowledge about Marix and did not recognize the name. The court admitted the records “de bene.”
[¶4] Additionally, Wilmington attempted to prove that it had properly mailed to Berry a notice of default and right to cure. Wilmington presented testimony indicating that the notice had been mailed, and the court admitted in evidence a copy of the notice, which contained a “First-Class Mail” designation on the exhibit‘s cover page and a “Transaction Report” from LenderLive, LLC, indicating that a notice was mailed in January 2017. Berry testified that she had never rеceived the notice and that there were three other individuals who also received mail at her address.
[¶5] Regarding the business records, the court sustained Berry‘s objection made at trial and concluded that, although the witness was “qualified ... to lay the foundation necessary to admit the ... loan payment history,” the “unexplained reference” to Mаrix was “fatal to [Wilmington‘s] attempts to lay a proper foundation for the admission of [the records].” The court found that the reference to Marix “indicate[s] a lack of trustworthiness of the records offered.” Additionally, the court found that Wilmington had “failed to prove timely receipt of notice of the right to cure” and that Berry had presented a “credible reason explaining why she may not have received it.” Because it excluded the evidence of the business records and found that Wilmington did not prove that it had properly served Berry with the notice of default and right to cure, the court entered judgment in favor of Berry on May 14, 2019.
B. Post-Judgment Motions
[¶6] On May 28, 2019, Wilmington moved to amend the judgment. See
[¶7] On June 13, 2019, Berry filed a motion seeking an award of attorney fees because Wilmington “d[id] not prevail.”
[¶8] The court held a hearing on July 17, 2019, and, on September 27, 2019, entered orders on the two pending post-judgment motions. In one order, the court denied Wilmington‘s motion to amend, concluding that “the unexplained appearance of M[a]rix Serviсing in [the business records] raises a host of doubts about the reliability of the documents.” The court also declined to take judicial notice of the documents offered by Wilmington, reasoning that such notice “would not resolve the trustworthiness issues raised by” the reference to Marix in the records or “the failure of the witness ... to even recognize the name [Mаrix].” In a separate order, the court granted Berry‘s motion for attorney fees, concluding that “from the plain language of the statute ... [Berry] need not prove bad faith or extraordinary circumstances.”4 Wilmington timely appealed. See
II. DISCUSSION
A. Evidentiary Issues
[¶9] Wilmington‘s arguments address two of the eight elements of proof necessary to support a judgment of foreclosure: “the amount due on the mоrtgage note, including any reasonable attorney fees and court costs,” and “evidence of [a] properly served notice of default and mortgagor‘s right to cure in compliance with statutory requirements.” Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700 (quotation marks omitted). We address each in turn.
1. Business Records
[¶10] Wilmington contends that the court erred in excluding evidence of business records demonstrating the amount due on Berry‘s note, arguing that it offered sufficient foundational testimony to admit the evidence pursuant to the business records exception to the hearsay rule. See
[¶11] We review for clear error “[a] trial court‘s determination regarding whether the necessary factual foundation to admit evidence pursuant to the business records exception has, or has not, been established,” M & T Bank v. Plaisted, 2018 ME 121, ¶ 19, 192 A.3d 601 (quotation marks omitted), and review the court‘s “ultimate determination of admissibility for an abuse of discretion,” Am. Express Bank FSB v. Deering, 2016 ME 117, ¶ 12, 145 A.3d 551 (quotation marks omitted).
[¶12] The purposе underlying the business records exception to the hearsay rule is “to allow the consideration of a business record, without requiring firsthand testimony regarding the recorded facts, by supplying a witness whose knowledge of business practices for production and retention of the record is sufficient to ensure the reliability and trustworthiness of the record.” Avis Rent A Car Sys., LLC v. Burrill, 2018 ME 81, ¶ 28, 187 A.3d 583 (quotation marks omitted). Maine Rule of Evidence 803(6) “dictates both (1) what foundation must be laid to admit such evidence as an exception to the rule excluding hearsay evidence, and (2) the type of witness required to lay that foundation.” Greenleaf, 2014 ME 89, ¶ 25, 96 A.3d 700. In order to lay the proper foundation, a party must provide, in relevant part, “the testimony of the custodian or another qualified witness,”
(A) The record was made at or near the time by—or from information transmitted by—someone with knowledge;
(B) The record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit; [and]
(C) Making the record was a regular practice of that activity[.]
excluded [evidence] if the sources of information or other circumstances indicated a lack of trustworthiness even if it otherwise would have been admissible“).
[¶13] Here, the employee of Fay Servicing testified regarding his familiarity with the business records of the various loan servicers and was, as the court found, “qualified ... to lay the foundation necessary to admit the screenshots of the loan payment history.” After Wilmington laid this foundation, however, Berry had the opportunity, and burden, to demonstrate that “the source of information or the method or circumstances of preparation indicate a lack of trustworthiness.”
[¶14] Because the court‘s finding that the business records were untrustworthy was supported by the evidence, the trial court did not clearly err or abuse its
2. Notice of Default and Right to Cure
[¶15] Wilmington also argues that the court erred in finding that Wilmington failed to prove timely receipt of the notice of default and right to cure, asserting that the court gave “undue weight” to Berry‘s testimony. We review a trial court‘s factual findings in a foreclosure action for clear error. See JPMorgan Chase Bank, N.A. v. Lowell, 2017 ME 32, ¶ 12, 156 A.3d 727 (quotation marks omitted). As the party with the burden of proof at trial, Wilmington “must establish on this appеal that contrary findings were compelled by the evidence.” Wuestenberg v. Rancourt, 2020 ME 25, ¶ 8, 226 A.3d 227.
[¶16] One of the essential elements of proof necessary to support a judgment of foreclosure is “evidence of [a] properly served notice of default and mortgagor‘s right to cure in compliance with statutory requirements.” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700 (quotation marks omitted). “[A] mortgagee may not аccelerate maturity of the unpaid balance of [an] obligation or otherwise enforce [a] mortgage because of a default unless and until a notice of default and right to cure has been provided to the mortgagor.” Bordetsky v. JAK Realty Trust, 2017 ME 42, ¶ 6, 157 A.3d 233 (quotation marks omitted). The contents of the notice are governed by statute. See
[¶17] At the time of the events at issue here, section 6111 defined the procedures for ensuring that the notice was received by the mortgagor, stating that “[a] mortgagee shall provide notice to a mortgagor ... by[] [c]ertified mail, return receipt requested ... or [o]rdinary first-class mail, postage prepaid.”
[¶18] Here, Wilmington presented testimonial evidence that the notice had been mailed and also entered in evidence a copy of both the notice of default and the “Transaction Report” from LendеrLive,
[¶19] Because Wilmington did not provide “conclusive proоf” of receipt and because the court‘s findings are supported by the record, the court did not clearly err in finding that Wilmington failed to prove that Berry received a copy of the notice of default and right to cure. Wilmington has not demonstrated on appeal that a contrary finding was “compelled by the evidence.” Wuestenberg, 2020 ME 25, ¶ 8, 226 A.3d 227.
B. Attorney Fees
[¶20] Finally, Wilmington argues thаt the court abused its discretion in awarding attorney fees to Berry, arguing that it did not file the foreclosure complaint in bad faith and that
[¶21] We review a court‘s award of attorney fees for an abuse of discretion, “mindful that the trial court is in the best position to observe the unique nature and tenor of the litigation as it relates to a request for attorney fees.” Homeward Residential, Inc. v. Gregor, 2017 ME 128, ¶ 12, 165 A.3d 357 (quotation marks omitted). When the “interpretation of a statute is required in conjunction with the award ... [of attornеy fees], we review the statutory construction de novo.” Kilroy v. Ne. Sunspaces, Inc., 2007 ME 119, ¶ 6, 930 A.2d 1060.
[¶22] A court‘s authority to award attorney fees may be based on “a specific statutory authorization.” Sebra v. Wentworth, 2010 ME 21, ¶ 17, 990 A.2d 538. Section 6101 provides, in relevant part, that
[i]f the mortgagee does not prevail, or upon evidence that the action was not brought in good faith, the court may order the mortgagee to pay the mortgagor‘s reasonablе court costs and attorney‘s fees incurred in defending against the foreclosure or any proceeding within the foreclosure action and deny in full or in part the award of attorney‘s fees and costs to the mortgagee.
The entry is:
Judgment affirmed.
Andrew J. Schaefer, Esq., Bendett & McHugh, P.C., Portland, for appellant Wilmington Trust, National Association
Frank D‘Alessandro, Esq., and Deborah Ibonwa, Esq., Maine Equal Justice, Augusta; Thomas A. Cox, Portland; and Eugene J. McLaughlin, Presque Isle, for аppellee Lisa Berry
Fort Kent District Court docket number RE-2018-1
FOR CLERK REFERENCE ONLY