US BANK NA AS LEGAL TITLE TRUSTEE FOR TRUMAN 2013 SC3 TITLE TRUST v. HLC ESCROW INC et al

Filing 32

ORDER ON DEFENDANTS' MOTIONS TO DISMISS granting 24 Motion to Dismiss; granting 13 Motion to Dismiss for Failure to State a Claim, and denying as moot 23 Motion to Strike. By JUDGE GEORGE Z. SINGAL. (ccs)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
US BANK N.A. AS LEGAL TITLE
TRUSTEE FOR TRUMAN 2013 SC3
TITLE TRUST,
Plaintiff,
v.
HLC ESCROW INC.,
and
FIRST AMERICAN TITLE INSURANCE
COMPANY,

Defendants.

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ORDER ON DEFENDANTS’ MOTIONS TO DISMISS
Before the Court are Defendants’ Motions to Dismiss (ECF Nos. 13 & 24) and Defendant
HLC Escrow’s Motion to Strike (ECF No. 23). As briefly explained herein, the Court determines
that Plaintiff’s claims are time barred and therefore GRANTS Defendants’ Motions and DENIES
AS MOOT the Motion to Strike.1

After HLC Escrow Inc. (“HLC”) filed its Motion to Dismiss, First American Title Insurance Company (“FATIC”)
filed an “objection” contending that it would be premature to dismiss its co-defendant. (ECF No. 20.) HLC responded
with a pleading challenging FATIC’s ability to raise such an “objection” and moving to strike the documents that
FATIC attached to its filing. (ECF No. 23.) FATIC subsequently moved to dismiss all of US Bank’s claims against
it. (ECF No. 24.) Because the Court is dismissing all of US Bank’s claims, the cross-filings between HLC and FATIC
are MOOT. The Court has not considered the disputed attachments (ECF Nos. 20-1 & 20-2) in resolving the Motions
to Dismiss but notes that consideration of these documents would not change the Court’s decision on the Motions to
Dismiss.
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I.

LEGAL STANDARD
The Federal Rules of Civil Procedure require only that a complaint contain “a short and

plain statement of the grounds for the court’s jurisdiction . . . a short and plain statement of the
claim showing that the pleader is entitled to relief; and a demand for the relief sought[.]” Fed. R.
Civ. P. 8(a)(1)-(3). A viable complaint need not proffer “heightened fact pleading of specifics,”
but in order to survive a motion to dismiss it must contain “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), a defendant may present a
statute of limitations defense when the passage of time prevents a plaintiff from stating “a claim
upon which relief can be granted.” However, the facts supporting the defense must be apparent
on the face of the pleadings. Santana-Castro v. Toledo-Dávila, 579 F.3d 109, 113-14 (1st Cir.
2009).

Generally, the Court “may consider only facts and documents that are part of or

incorporated into the complaint” when resolving any motion brought pursuant to Rule 12(b)(6).
United Auto., Aerospace, Agric. Implement Workers of Am. Int’l Union v. Fortuño, 633 F.3d 37,
39 (1st Cir. 2011) (quotation marks omitted).
With this standard in mind, the Court lays out the well-pled factual allegations as they
relate to Defendants’ statute of limitations arguments.

II.

FACTUAL BACKGROUND
On April 16, 2007, Douglas and Sara Trask executed a promissory note with original lender

Home Loan Center Inc. d/b/a LendingTree Loans (“Lending Tree”). The Note was secured by a
mortgage granted to Mortgage Electronic Registration Systems, Inc. (“MERS”), solely as nominee
for Lending Tree and its successors and assigns, on real property located at Stream Road in

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Winterport, Maine (the “2007 Mortgage”).2 HLC Escrow Inc. (“HLC”) was the closing agent on
the mortgage loan and First American Title Insurance Company (“FATIC”) was the title insurer
for MERS as nominee for Lending Tree and its successors and assigns.
According to Plaintiff US Bank N.A. as Legal Title Trustee for Truman 2013 SC3 Title
Trust (“US Bank”), the 2007 Mortgage accidentally described “an unimproved parcel that was
vacant land,” as opposed to an “improved parcel with [a] residential structure” on the property.
(Compl. (ECF No. 1-2) ¶¶ 7-8.) The 2007 loan refinanced a previous loan to the Trasks that was
secured by a mortgage describing the improved parcel. US Bank alleges the value of the property
encumbered by the 2005 Mortgage was $230,000, while the value of the property encumbered by
the 2007 Mortgage was merely $40,000.
In 2010, as part of the Trasks’ personal bankruptcy proceedings, an adversary proceeding
was brought to determine what property was covered by the 2007 Mortgage. This proceeding
resulted in a June 10, 2011 Judgment finding the mortgage covered only the Trasks’ unimproved
parcel.3
US Bank received an interest in the 2007 Mortgage via Quitclaim Assignment on
November 7, 2014.4 In light of the Trasks’ default under the Note and 2007 Mortgage, US Bank
filed a foreclosure action and judgment entered in its favor. However, the foreclosure was limited
to the unimproved parcel described in the 2007 Mortgage documents. US Bank foreclosed on the
property via public sale on April 14, 2015, and was the highest bidder, taking title to the property.

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A copy of the 2007 Mortgage is attached to the Complaint as Exhibit B. (ECF No. 1-2, Page ID #s 23-40.)

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The Complaint and Judgment in District of Maine Bankruptcy Court Adversary Proceeding No. 10-1005 are attached
to the Complaint in this matter as Exhibits K & L. (ECF No. 1-2, Page ID #s 82-86.)
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In 2009, MERS, acting solely as nominee for Lending Tree, assigned its interest in the 2007 Mortgage to BAC Home
Loans Servicing, L.P. f/k/a Countrywide Home Loans Servicing, L.P. In 2014, Bank of America, N.A., successor by
merger to BAC Home Loans Servicing, assigned its interest in the 2007 Mortgage to US Bank.

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Previously, BAC Home Loans Servicing, L.P., US Bank’s predecessor in interest, had filed
an insurance claim with FATIC on April 8, 2010, which was denied on May 20, 2010, via email.5
In its denial, FATIC stated, in part:
From the documents provided, it appears that you are not alleging any title defect
as to [a] parcel which is insured. As the Polic[y] insures the same land described
in the insured mortgage, and as the mortgagor owned the land on which he granted
th[e] mortgage, your assertion that an additional or different parcel was to be
encumbered does not give rise to a claim under th[e] Policy.
(Ex. C to FATIC’S Motion to Dismiss (ECF No. 24-3), Page ID # 311.) The same claim was filed
and again denied, for the same reasons, in 2011. In a third denial on May 13, 2016, FATIC stated,
in part:
As you are aware, this same claim was previously submitted to us on behalf of the
insured by other counsel and denied by the company on May 10, 2010 and February
7, 2011. For the reasons set forth below we renew that denial . . . . The claim is
denied because you are not alleging any title defect as to 51 Stream Road, the parcel
which is insured. The Policy insures the same land described in the insured
mortgage, which the mortgagor owned at the time he granted the mortgage. The
assertion that a different parcel, 47 Stream Road, was intended to be encumbered
does not give rise to a claim under the Policy.
(Ex. E to FATIC’s Motion to Dismiss (ECF No. 24-5), Page ID #s 315-16.)
On August 9, 2016, US Bank filed a complaint in the Maine Superior Court alleging (i)
that FATIC’s handling of US Bank’s insurance claims violated the Maine Unfair Claims
Settlement Practices Act (“UCSPA”), 24-A M.R.S.A. § 2436-A (Count I); (ii) unilateral mistake
by FATIC resulting from the title insurer’s failure to properly describe the improved parcel with
the residential structure in the Mortgage’s Legal Property Description (Count II); (iii) negligence
by FATIC for failing to properly describe the property (Count III); (iv) negligence by HLC for

This correspondence was not included with US Bank’s Complaint but was attached to FATIC’s pleadings. The
Court considers this correspondence nonetheless because the authenticity of the records is undisputed and these
documents are integral to assessing the timeliness of US Bank’s claims. Alt. Energy, Inc. v. St. Paul Fire & Marine
Ins. Co., 267 F.3d 30, 33-34 (1st Cir. 2001).
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closing the loan “despite the obvious discrepancy” between the property described in the 2005 and
the 2007 Mortgages (Count IV); and (v) HLC’s breach of a general duty of care owed to US Bank
(Count V). (Compl. at ¶¶ 33-69.)

III.

DISCUSSION
HLC and FATIC move to dismiss US Bank’s claims as, inter alia, time barred. “Granting

a motion to dismiss based on a limitations defense is entirely appropriate when the pleader’s
allegations leave no doubt that an asserted claim is time-barred.” LaChapelle v. Berkshire Life Ins.
Co., 142 F.3d 507, 509 (1st Cir. 1998).
The Court agrees with the Defendants that the applicable statute of limitations is the general
six-year statute of limitations for civil claims under Maine law. 14 M.R.S.A. § 752 (“All civil
actions shall be commenced within 6 years after the cause of action accrues and not afterwards . .
. .”); see Drilling & Blasting Rock Specialists, Inc. v. Rheaume, 147 A.3d 824, 828 (Me. 2016)
(noting “the six-year limitations period generally applicable to civil actions”). Because US Bank
has not alleged fraud or concealment by the Defendants, the limitations period began to run on US
Bank’s claims against HLC in 2007 when HLC closed on the mortgage documents containing the
allegedly erroneous legal description of the property to be encumbered.

See Johanson v.

Dunnington, 785 A.2d 1244, 1246 (Me. 2001) (plaintiffs were required to file their claims
regarding negligence and breach of contract arising from a mortgage deed that failed to disclose
an easement within six years of the closing date pursuant to 14 M.R.S.A. § 752). Regarding the
claims against FATIC, even conceding, in the best-case-scenario for US Bank, that the clock began
when the title insurer denied US Bank’s claim on May 20, 2010, the six-year period had run by
the time US Bank filed this action on August 9, 2016. See VanHaaren v. State Farm Mut. Auto.

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Ins. Co., No. CIV. 91-309 P, 1992 WL 466400, at *2 (D. Me. May 22, 1992) (noting without
comment party’s understanding that statute of limitations is six years for UCSPA claims). US
Bank has not provided any authority that persuades the Court that the six-year statute of limitations
was tolled or extended every time US Bank filed the same claim and received a denial on the same
basis from FATIC.6
US Bank’s core argument in response is that a twenty-year statute of limitations applies.
However, the Court concludes that the twenty-year statute of limitations pointed to by US Bank is
inapplicable because it concerns personal actions on debt obligations. See 14 M.R.S.A. § 751
(“[P]ersonal actions on contracts or liabilities under seal, promissory notes signed in the presence
of an attesting witness, or on the bills, notes or other evidence of debt issued by a bank shall be
commenced within 20 years after the cause of action accrues.”); U.S. Bank Nat’l Ass’n v. Adams,
102 A.3d 774, 776 n.2 (Me. 2014) (explaining that the twenty-year statute of limitations was
inapplicable “because U.S. Bank’s cause of action involves an equitable claim against
[Defendant]’s ownership interest in the [ ] property and is not an action to enforce the contested
note”) (emphasis added). Because US Bank is not suing on the Mortgage or Note, the twenty-year
period is inapplicable.7
In short, the Court concludes that US Bank’s claims are subject to Maine’s six-year statute
of limitations and that this limitations period had passed prior to August 9, 2016. As a result,
Plaintiff’s claims are time barred and subject to dismissal on that basis.8

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To the extent that Weaver v. New Eng. Mut. Life Ins. Co., 52 F. Supp. 2d 127, 130-31 (D. Me. 1999) discusses the
possibility that a denial of a claim under Maine’s Unfair Claims Settlement Practices Act can be “ongoing,” that
decision in no way supports the proposition that US Bank’s repeated filing of the same claim with FATIC extended
the applicable statute of limitations.
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The parties do not point to any contractual limitations period or argue that such a period applies.

Given its conclusion that Plaintiff’s claims are time barred, the Court need not and does not address Defendants’
alternative arguments for dismissal.
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IV.

CONCLUSION
The Court GRANTS Defendants’ Motions to Dismiss (ECF Nos. 13 & 24) and hereby

DISMISSES Plaintiff’s claims.
SO ORDERED.
/s/ George Z. Singal
United States District Judge
Dated this 29th day of December, 2016.

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