US BANK TRUST NA v. AKEY

Filing 22

REPORT AND RECOMMENDED DECISION re 13 MOTION for Default Judgment filed by US BANK TRUST NA Objections to R&R due by 1/10/2017 By MAGISTRATE JUDGE JOHN H. RICH III. (akr)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE

U.S. BANK TRUST, N.A., as
Trustee for LSF9 Master
Participation Trust,

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Plaintiff
v.
KAREN J. AKEY,
Defendant

No. 2:16-cv-00414-JDL

RECOMMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW
ON MOTION FOR DEFAULT JUDGMENT OF FORECLOSURE AND SALE
RE: PROPERTY AT 10 SOUTH RIDGE DRIVE, STANDISH, MAINE 04084
MORTGAGE: AUGUST 5, 2008, BOOK 26280, PAGE 320

Plaintiff, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (“U.S.
Bank”), moves pursuant to Federal Rule of Civil Procedure 55(b)(2) for a default judgment on its
complaint against defendant Karen J. Akey for foreclosure and sale of property owned by Akey at
10 South Ridge Drive in Standish, Maine (“Standish Property”). See Plaintiff’s Motion for Default
Judgment and Memorandum in Support of Motion for Default Judgment (“Default Judgment
Motion”) (ECF No. 13); Trial Memo, marked for identification at hearing as Exhibit 9; [Proposed]
Judgment of Foreclosure and Sale (“Proposed Judgment”), marked for identification at hearing as
Exhibit 10; Complaint (ECF No. 1).1

As U.S. Bank’s counsel acknowledged at hearing, the Proposed Judgment seeks only foreclosure and sale. See
generally Proposed Judgment. It explicitly states: “This judgment does not seek any personal liability of the Defendant
as affected by any bankruptcies filed but only seeks an In Rem Judgment against the property.” Id. at [2]. The Trial
Memo, as well, addressed only U.S. Bank’s entitlement to a foreclosure and sale. See generally Trial Memo. Although
counsel described the Proposed Judgment as an example, meant for informational purposes only, I have assumed that
U.S. Bank means to press only its claim for Foreclosure (Count I). See Complaint ¶¶ 14-23. Accordingly, as noted
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I. Procedural Background
U.S. Bank filed the Complaint on August 15, 2016. See Complaint. On August 26, 2016,
it filed proof of service of a Summons on Akey, indicating that the Summons had been left at
Akey’s residence with Ted Tocci, an individual of suitable age and discretion who resided there.
See ECF No. 8. On October 3, 2016, U.S. Bank filed a motion for the entry of default, see ECF
No. 9, which the Clerk’s Office granted the same day, no answer or responsive pleading having
been filed, see ECF No. 11. U.S. Bank also filed a motion for a default judgment hearing, see ECF
No. 10, which I denied without prejudice because U.S. Bank had not accompanied that request
with a motion and memorandum for default judgment or supporting evidence, see ECF No. 12.
On November 1, 2016, U.S. Bank filed the instant motion for default judgment and request
for a hearing to establish damages. See Default Judgment Motion. I granted its request for an
evidentiary hearing, see ECF Nos. 14-15, which was scheduled for December 12, 2016, at 9:00
a.m., see Notice and Order dated November 14, 2016 (ECF No. 16). I directed that counsel for
U.S. Bank provide a copy of my Notice and Order, together with another copy of the Summons
and Complaint, by both certified mail, return receipt requested, and first-class mail to Akey, and
by first-class mail to Tocci. See id. I further directed that counsel file with the court, no later than
December 5, 2016, a certification that those steps had been taken, attaching the return receipt for
the Akey correspondence. See id.
On December 5, 2016, counsel filed an affidavit of Lisa M. Higgins, a paralegal at
counsel’s law firm, averring that, on November 30, 2016, she mailed copies of the Notice and
Order, as well as the Summons and Complaint, by regular and certified mail to Akey and by regular

below, I have recommended that U.S. Bank show cause why its remaining claims, for Breach of Fixed Rate Note
(Count II), Breach of Contract, Money Had and Received (Count III), Quantum Meruit (Count IV), and Unjust
Enrichment (Count V), see Complaint ¶¶ 24-54, should not be dismissed.

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mail to Tocci. See ECF No. 18. She stated that she had not received the return receipt for the
certified mailing, but she appended a copy of a USPS tracking verification page indicating that
USPS had been unable to deliver the certified mail and had left a notice for the recipient. See ECF
Nos. 18 & 18-1.
“While a default . . . constitutes an admission of liability, the quantum of damages remains
to be established by proof unless the amount is susceptible of mathematical computation.” KPS
& Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 19 (1st Cir. 2003) (citation and internal
punctuation omitted). “A hearing may be required . . . to set damages when the amount is in
dispute or is not ascertainable from the pleadings.” In re Home Rests., Inc., 285 F.3d 111, 114 (1st
Cir. 2002).
The hearing, as noticed, was duly convened on December 12, 2016. Counsel for U.S. Bank
appeared, presented one witness, Maria Curtis of Caliber Home Loans, Inc. (“Caliber”), and
offered eight exhibits, all of which were admitted. Akey did not appear. Counsel for U.S. Bank
represented that the letters sent to Akey and Tocci by regular mail had not been returned and that,
per an inquiry he made of USPS on the morning of December 10, 2016, Akey had made no
arrangements as of that time to retrieve the letter sent by certified mail.
II. Proposed Findings of Fact
1.

On August 5, 2008, Akey executed a Fixed Rate Note (“Note”) in favor of Wells

Fargo Bank, N.A. (“Wells Fargo”), promising to pay the sum of $252,000.00 to Wells Fargo on a
15-year repayment schedule. See Exh. 1. On the same date, she executed a Mortgage in favor of
Wells Fargo, mortgaging the Standish Property as security for repayment of the Note. See Exh. 2.

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2.

The Note states: “I understand that the Lender may transfer this Note. The Lender

or anyone who takes this Note by transfer and who is entitled to receive payments under this Note
is called the “Note Holder.” Exh. 1 at 1. Stamped at the bottom of the Note is the following:
WITHOUT RECOURSE
PAY TO THE ORDER OF [BLANK]
WELLS FARGO BANK, N.A.
BY Joan M. Mills [signature]
Joan M. Mills, Vice President
Id. at 3.
3.

U.S. Bank is in possession of the original Note, which its counsel presented to me

for inspection during the hearing, and which I returned to him. The Note appeared identical to the
copy marked as Exhibit 1 and bore an original signature.
4.

Wells Fargo initially serviced the Akey loan, but later arranged for Caliber, a home

loan servicing company, to do so. See Testimony of Maria Curtis (“Curtis Test.”). On October
20, 2015, Wells Fargo granted a limited power of attorney to Caliber to undertake certain actions,
including executing any documents as might be necessary or appropriate to enable Caliber to carry
out loan servicing and administrative duties. See Exh. 7. Curtis manages the Akey account for
Caliber. See Curtis Test. When Caliber began servicing the Akey account, it obtained Wells
Fargo’s records concerning the loan and integrated them with its own records. See id. Curtis also
researched the Wells Fargo records to ensure their accuracy. See id.
5.

By Assignment of Mortgage dated April 5, 2016, Wells Fargo assigned all of its

right, title, and interest in and to the Mortgage to U.S. Bank, as Trustee for LSF9 Master
Participation Trust. See Exh. 3. Approximately a month earlier, on March 2, 2016, U.S. Bank had

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granted a limited power of attorney to Caliber to facilitate servicing of certain home loans,
including those of LSF9 Master Participation Trust. See Exh. 8.
6.

By letter dated June 21, 2016, Caliber formally notified Akey on behalf of LSF9

Master Participation Trust that Akey had defaulted on the Note and Mortgage by having failed to
make any payment since August 2012 and had the right to cure the default by July 29, 2016, by
paying all sums owed as a result of the default (then totaling $119,035.86). See Exh. 4. Akey
made no payment by July 29, 2016, and has made no payment since. See Curtis Test.
7.

At hearing, counsel for U.S. Bank represented that his client seeks the following,

based upon an accounting prepared by Caliber of all monies due and owing on the Note through
January 2, 2017, see Exh. 5; Curtis Test.: (i) $205,065.50 in unpaid principal, (ii) $8,488.01 in
unpaid escrow,2 (iii) $49,984.48 in accrued interest for the period from August 1, 2012, to
December 1, 2016,3 (iv) court costs of $410.00, (v) statutory disbursements of $10.72, (vi) title
fees of $375.00, (vii) an inspection fee of $120.00, and (viii) late charges totaling $5,189.50. These
sums total $269,643.21.
III. Proposed Conclusions of Law
1.

“In Maine, foreclosure is a creature of statute[.]” Bank of Am., N.A. v. Greenleaf,

2014 ME 89, ¶ 8, 96 A.3d 700, 704 (citing 14 M.R.S.A. §§ 6101-6325).
2.

“After breach of condition in a mortgage of first priority, the mortgagee or any

person claiming under the mortgagee may proceed for the purpose of foreclosure by a civil action
against all parties in interest in either the Superior Court or the District Court in the division in

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Caliber calculated total past-due escrow costs as $23,627.27. See Exh. 5 at [1], [6]. However, at hearing, counsel
for U.S. Bank represented that his client does not seek to recover $15,139.26 of that total, categorized by Caliber as
an “Unspecified Balance,” which Curtis testified she had been unable to verify. See id. at [6]; Curtis Test.
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Caliber also calculated that interest for the period from December 1, 2016, to January 1, 2017, would total $961.24,
and interest for the period from January 1, 2017, to January 2, 2017, would total $31.60. See Exh. 5 at [1]; Curtis
Test. However, counsel for U.S. Bank stated at hearing that his client does not seek to recover those sums.

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which the mortgaged premises . . . is located[.]” 14 M.R.S.A. § 6321.4 “A plaintiff seeking a
foreclosure judgment must comply strictly with all steps required by statute.” Greenleaf, 2014
ME 89, ¶ 18, 96 A.3d at 708 (citation and internal quotation marks omitted).
3.

“After hearing, the court shall determine whether there has been a breach of

condition in the plaintiff’s mortgage, the amount due thereon, including reasonable attorney’s fees
and court costs, the order of priority and those amounts, if any, that may be due to other parties
that may appear and whether any public utility easements held by a party in interest survive the
proceedings.” 14 M.R.S.A. § 6322.
4.

A mortgagee must (i) commence its foreclosure action in accordance with the

Maine Rules of Civil Procedure, see id. § 6321, (ii) establish its standing to sue with respect to
both the note and mortgage at issue, see Greenleaf, 2014 ME 89, ¶¶ 8-9, 96 A.3d at 704-05, and,
(iii) on the merits, establish “eight elements of proof to support a judgment of foreclosure[,]” id.,
2014 ME 89, ¶ 18, 96 A.3d at 708.
5.

U.S. Bank commenced the instant foreclosure action in accordance with the Maine

Rules of Civil Procedure by filing the instant Complaint and, within 90 days thereafter, filing a
return of service indicating that the Summons and Complaint were served by a civil deputy sheriff
at Akey’s “dwelling house or usual place of abode with some person of suitable age and discretion
then residing therein[.]” Me. R. Civ. P. 3 & 4(c)(2), (d)(1). In an abundance of caution, I also
directed U.S. Bank to mail a copy of the Summons and Complaint, along with a copy of the court’s
November 14, 2016, Notice and Order, to Akey and Tocci, the individual served on her behalf, by

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The fact that this action was filed in the U.S. District Court rather than the Maine Superior Court or the Maine District
Court is of no matter. This court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1332 based
on diversity of citizenship and amount in controversy. See Residential Mortg. Loan Trust 2013-TT2 ex rel. U.S. Bank
Nat’l Ass’n, __ F. Supp.3d __, CIVIL NO. 2:15-CV-466-DBH, 2016 WL 1733434, at *3 (D. Me. Apr. 29, 2016). This
suit, which concerns property in Standish, properly was brought at the U.S. District Court in Portland. See Local Rule
3(b).

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regular first-class mail and to Akey by certified mail, return receipt requested. U.S. Bank complied
with that directive.
6.

U.S. Bank, as trustee for LSF9 Master Participation Trust, has standing to enforce

the Note by virtue of its possession of the original Note, which contains a blank indorsement. See
Greenleaf, 2014 ME 89, ¶ 11, 96 A.3d at 706 (“[A]s the possessor of a note indorsed in blank, the
Bank provided its status as the holder of the note and therefore enjoys the right to enforce the
debt.”) (citing 11 M.R.S.A. §§ 1-1201(5), (21)(a) & 3-1301(1)).
7.

U.S. Bank, as trustee for LSF9 Master Participation Trust, has standing to enforce

the Note by virtue of Wells Fargo’s Assignment of Mortgage dated April 5, 2016.
8.

U.S. Bank meets the eight elements of proof to support a judgment of foreclosure:
A.

“[T]he existence of the mortgage, including the book and page number of

the mortgage, and an adequate description of the mortgaged premises, including the street
address, if any[,]” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d at 708: See generally Exh. 2
(Mortgage, with book and page number stamped across top of each page); Exhibit
A/Schedule A thereto (legal description of property).
B.

“[P]roperly presented proof of ownership of the mortgage note and

[evidence of the mortgage note and] the mortgage, including all assignments and
endorsements of the note and the mortgage[,]” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d at
708 (footnote omitted): See generally Exhs. 1 (Note), 2 (Mortgage), 3 (Assignment of
Mortgage); Curtis Test.
C.

“[A] breach of condition in the mortgage[,]” Greenleaf, 2014 ME 89, ¶ 18,

96 A.3d at 708: This is established not only by Akey’s default, see, e.g., KPS, 318 F.3d at

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19, but also by evidence that Akey has not made a payment on the Note since August 2012,
see Curtis Test.
D.

“[T]he amount due on the mortgage note, including any reasonable attorney

fees and court costs[,]” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d at 708: U.S. Bank
establishes that it is due a total of $269,643.21 on the Note. It has not sought, or established
any amounts due, for attorney fees or court costs.5
E.

“[T]he order of priority and any amounts that may be due to other parties in

interest, including any public utility easements[,]” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d
at 708: U.S. Bank represents that it has first priority and that there are no parties in interest
other than Akey, who has second priority.
F.

“[E]vidence of properly served notice of default and mortgagor’s right to

cure in compliance with statutory requirements[,]” id.: U.S. Bank establishes that notice
of Akey’s right to cure her default was properly served by ordinary first-class mail, postage
prepaid, postmarked on June 21, 2016. See 14 M.R.S.A. § 6111(3)(B); USPS Certificate
of Mailing, included in Exh. 4. This is conclusive proof of receipt of the notice on June
24, 2016. See id. The notice meets the eight substantive content requirements set forth in
section 6111, including the provision of at least 35 days (until July 29, 2016) for Akey to

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The Proposed Judgment also seeks (i) additional reasonable expenses incurred by U.S. Bank after December 12,
2016, in connection with this action, including the completion of the foreclosure or in connection with a redemption,
(ii) additional prejudgment interest accruing on the principal balance after December 12, 2016, pursuant to the Note,
(iii) post-judgment interest pursuant to 14 M.R.S.A. § 1602-C, (iv) any amounts advanced by U.S. Bank to protect its
mortgage security, and (v) attorney fees, described as “integral to the relief sought[.]” Proposed Judgment at [1]-[2].
I understood U.S. Bank’s counsel to have set forth at hearing the entirety of the relief sought by his client, which did
not include any of these items. Indeed, as noted above, counsel stated at hearing that his client did not seek
prejudgment interest accruing on the Note beyond December 1, 2016. As to post-judgment interest, however, U.S.
Bank is entitled to such post-judgment interest in this diversity case; that entitlement derives from 28 U.S.C. § 1961(a).
See Fratus v. Republic W. Ins. Co., 147 F.3d 25, 30 & n.5 (1st Cir. 1998) (applying federal law regarding postjudgment interest in diversity case).

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cure her default. Compare Exh. 4 (Notice of Right To Cure dated June 21, 2016) with 14
M.R.S.A. § 6111(1) & (1-A).6
G.

“[A]fter January 1, 2010, proof of completed mediation (or waiver or

default of mediation), when required, pursuant to the statewide foreclosure mediation
program rules[,]” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d at 708: Akey’s failure to appear
in this matter establishes a default with respect to any rights pursuant to the mediation
program.
H.

“[I]f the homeowner has not appeared in the proceeding, a statement, with

a supporting affidavit, of whether or not the defendant is in military service in accordance
with the Servicemembers Civil Relief Act[,]” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d at
708: See Exh. 6 (Affidavit Relating to Military Search & exhibits thereto).
9.

Accordingly, “a judgment of foreclosure and sale must issue providing that if the

mortgagor or the mortgagor’s successors, heirs and assigns do not pay the sum that the court
adjudges to be due and payable, with interest within the period of redemption, the mortgagee shall
proceed with a sale[.]” 14 M.R.S.A. § 6322.
10.

Maine law provides that, following a public foreclosure sale, “[a]ny deficiency

must be assessed against the mortgagor and an execution must be issued by the court therefor.”

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The eight substantive content requirements are: (i) notice of the mortgagor’s right to cure a default, (ii) “[a]n
itemization of all past due amounts causing the loan to be in default and the total amount due to cure the default[,]”
(iii) “[a]n itemization of any other charges that must be paid in order to cure the default[,]” (iv) “[a] statement that the
mortgagor may have options available other than foreclosure, that the mortgagor may discuss available options with
the mortgagee, the mortgage servicer or a counselor approved by the United States Department of Housing and Urban
Development and that the mortgagor is encouraged to explore available options prior to the end of the right-to-cure
period[,]” (v) “[t]he address, telephone number and other contact information for persons having authority to modify
a mortgage loan with the mortgagor to avoid foreclosure, including, but not limited to, the mortgagee, the mortgage
servicer and an agent of the mortgagee[,]” (vi) “[t]he name, address, telephone number and other contact information
for all counseling agencies approved by the United States Department of Housing and Urban Development operating
to assist mortgagors in the State to avoid foreclosure;” (vii) “[w]here mediation is available as set forth in [14 M.R.S.A.
§] 6321-A, a statement that a mortgagor may request mediation to explore options for avoiding foreclosure
judgment[,]” and (viii) “[a] statement that the total amount due does not include any amounts that become due after
the date of the notice.” 14 M.R.S.A. § 6111(1-A).

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Id. § 6324. However, as discussed above, the Proposed Judgment states that it “only seeks an In
Rem Judgment against the property.” Proposed Judgment at [2]. I construe this as a waiver of the
right to seek any deficiency judgment against Akey following any public foreclosure sale.
IV. Conclusion
For the foregoing reasons, I recommend that the court GRANT the Default Judgment Motion
as to Count I (Foreclosure) and, consistent with the foregoing, enter a judgment of foreclosure and
sale with respect to the Standish Property in the total sum of $269,643.21, plus post-judgment
interest in accordance with 28 U.S.C. 1961, and that U.S. Bank be ORDERED to show cause, no
later than January 10, 2017, why Counts II-V of its Complaint should not be DISMISSED as
MOOT.
I further recommend that the court DIRECT that:
1.

U.S. Bank is responsible for recording an attested copy of this Judgment and for

paying the appropriate recording fees.
2.

If Akey, or her heirs or assigns, pay U.S. Bank the amount adjudged due and owing

($269,643.21) within 90 days of the date of the Judgment, as that time period is calculated in
accordance with 14 M.R.S.A. § 6322, U.S. Bank shall forthwith discharge the Mortgage and file
a dismissal of this action on the ECF Docket.
3.

If Akey, or her heirs or assigns, do not pay U.S. Bank the amount adjudged due and

owing ($269,643.21) within 90 days of the date of the Judgment, as that time period is calculated
in accordance with 14 M.R.S.A. § 6322, her remaining rights to possession of the Standish
Property shall terminate, and U.S. Bank shall conduct a public sale of the Standish Property in
accordance with 14 M.R.S.A. § 6323, disbursing the proceeds first to itself in the amount of
$269,643.21 after deducting the expenses of the sale, with any surplus to Akey, or her heirs or

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assigns, in accordance with 14 M.R.S.A. § 6324. U.S. Bank has waived the right to seek any
deficiency judgment against Akey personally.
4.

Pursuant to 14 M.R.S.A. § 2401(3)(F), the Clerk shall sign a certification after the

appeal period has expired, certifying that the applicable period has expired without action or that
final judgment has been entered following appeal.
Finally, I recommend that the Judgment include the following provisions required by 14
M.R.S.A. § 2401(3):
1.

The names and addresses, if known, of all parties to this action, including counsel

of record, as set forth on the ECF Docket.
2.

The docket number of this case, No. 2:16-cv-00414-JDL.

3.

The finding that Akey, the only party to these proceedings besides U.S. Bank,

received notice of the proceedings in accordance with the applicable provisions of the Maine Rules
of Civil Procedure.
4.

A description of the real estate involved (the Standish Property), as set forth in

Exhibit A to the Complaint herein.
5.

The title “Judgment of Foreclosure and Sale,” the street address of the real estate

involved, 10 South Ridge Drive, Standish ME, 04084, and the book and page number of the
Mortgage, Cumberland County Registry of Deeds Book 26280, Page 320.

NOTICE
A party may file objections to those specified portions of a magistrate judge’s report or
proposed findings or recommended decisions entered pursuant to 28 U.S.C. § 636(b)(1)(B) for
which de novo review by the district court is sought, together with a supporting memorandum
and request for oral argument before the district judge, if any is sought, within fourteen (14)
days after being served with a copy thereof. A responsive memorandum and any request for

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oral argument before the district judge shall be filed within fourteen (14) days after the filing of
the objection.
Failure to file a timely objection shall constitute a waiver of the right to de novo review
by the district court and to appeal the district court’s order.
Dated this 26th day of December, 2016.

/s/ John H. Rich III
John H. Rich III
United States Magistrate Judge

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