TD BANK NA v. RANKIN et al
ORDER ON 11 MOTION FOR DEFAULT JUDGMENT By JUDGE JOHN A. WOODCOCK, JR. (ccs)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
TD BANK, N.A., f/k/a
TD Banknorth, N.A.,
ISABELLE RANKIN, et al.
ORDER ON MOTION FOR DEFAULT JUDGMENT
On April 7, 2017, TD Bank, N.A. (TD Bank) filed a complaint with this Court,
alleging that Isabelle Rankin and William Rankin (Rankins) of Saco, Maine were in
default on a loan secured by real property located in Oxford, Maine and seeking a
declaration that the Rankins were in default on their promissory note in favor of TD
Bank, a determination of the amount owing under that note, and a foreclosure of the
security underlying TD Bank’s mortgage. Compl. (ECF No. 1). TD Bank duly served
both Isabelle and William Rankin with a summons and a copy of the Complaint on
April 28, 2017, and filed the executed summonses with this Court on May 3, 2017.
Summons in a Civ. Action (ECF Nos. 7, 8). Neither Isabelle nor William Rankin has
appeared to defend against TD Bank’s civil action. On May 26, 2017, TD Bank moved
the Clerk of Court to enter default against the Rankins, Req. to Clerk to Enter Default
against Defs. Isabelle and William Rankin (ECF No. 9), and on the same day, the
Clerk duly entered a default against Isabelle and William Rankin. Order Granting
Mot. for Entry of Default (ECF No. 10).
On June 26, 2017, with its motion for default judgment, TD Bank filed an
extensive memorandum, arguing that it is entitled to a default judgment against the
Rankins. Pl. T.D. Bank, N.A.’s Mot. for Default J. (ECF No. 11) (TD Bank Default
Mot.). In the memorandum, TD Bank claimed that it is entitled to a default judgment
without a hearing because the Rankins have been defaulted. Id. at 4–11. TD Bank
first recited general law that applies when a defendant has been defaulted and
contends that “[i]f a defendant against whom default is entered has failed to appear,
no notice to that party is required prior to the entry of default judgment.” Id. at 4–7
(citing Scarcelli v. Gleichman, No. 2:12-cv-72-GZS, 2012 U.S. Dist. LEXIS 75516, at
*2–3 (D. Me. May 31, 2012); Ortiz-Gonzalez v. Fonovisa, 277 F.3d 59, 64 (1st Cir.
2002); Banco Bilbao Vizcaya Argentaria v. Family Rests., Inc. (In re The Home Rests.,
Inc.), 285 F.3d 111, 114 (1st Cir. 2002); BMG Music v. Marsters, 616 F. Supp. 2d 151,
153 (D. Me. 2009); Elektra Entertainment Group, Inc. v. Carter, 618 F. Supp. 2d 89,
92 (D. Me. 2009)).
The Court disagrees. First, none of the cases TD Bank cited for the proposition
that no hearing is required on a motion for default judgment in a foreclosure case is
a foreclosure case. Scarcelli was a complaint for declaratory judgment and other
equitable relief, Ortiz-Gonzalez, a copyright infringement case, Home Restaurants, a
bankruptcy appeal, Marsters, another copyright infringement case, and Carter, yet
another copyright infringement case. None of these cases is applicable to whether a
mortgagee who is seeking to foreclose a mortgage under Maine law is allowed to
forego a hearing in a motion for default judgment.
In Maine, “foreclosure is a creature of statute.” Bank of Am., N.A. v. Greenleaf,
2014 ME 89, ¶ 8, 96 A.3d 700, 708. To foreclose the Rankins’ real property, TD Bank
elected to proceed under 14 M.R.S. §§ 6321, et seq. and therefore “must comply strictly
with all steps required by statute.” Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700 (quoting
Chase Home Finance LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508). One
statutory requirement is that the court hold a “hearing” to determine whether there
has been a breach of condition in the 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.1 14 M.R.S. § 6322.
To obtain a default judgment, TD Bank filed its motion under Federal Rule of
Civil Procedure 55. TD Bank Default Mot. at 4. Rule 55 differentiates between
defaults for a sum certain, FED. R. CIV. P. 55(b)(1), and defaults for other types of
relief. Id. 55(b)(2). In its motion, TD Bank acknowledged that it is proceeding under
Rule 55(b)(2). TD Bank Default Mot. at 4. Like 14 M.R.S. § 6322, Rule 55(b)(2) refers
to a hearing to determine damages. FED. R. CIV. P. 55(b)(2). Specifically, Rule
55(b)(2) provides that a court “may conduct hearings or make referrals . . . when to
enter or effectuate judgment, it needs to: (A) conduct an accounting; (B) determine
The hearing requirement in 14 M.R.S. § 6322 may be procedural, not substantive, and
therefore not binding on this Court. The Court does not express an opinion on this issue and recites
the state statutory hearing requirement as a factor in its discretionary decision to require a hearing
under Rule 55(b)(2).
the amount of damages; (C) establish the truth of any allegation by evidence; or (D)
investigate any other matter.” Id.
Although whether to hold a Rule 55(b)(2) hearing is discretionary with the trial
court, the First Circuit has generally encouraged district courts to hold a such a
hearing. In KPS & Associates, Inc. v. Designs by FMC, Inc., 318 F.3d 1 (1st Cir. 2003),
the First Circuit reversed a district court’s conclusion that it could rely on the
contents of a verified complaint in assessing damages in a case where the defendant
had been defaulted. Id. at 18. The First Circuit quoted the Second Circuit with
approval when the Second Circuit wrote that “[w]hile the District Court may not have
been obligated to hold an evidentiary hearing, it could not just accept [plaintiff’s]
statement of the damages.” Id. (quoting Transatl. Marine Claims Agency v. Ace
Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)). The KPS Court quoted another
Second Circuit case, Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974), as stating that
“[w]hile a default judgment constitutes an admission of liability, the quantum of
damages remains to be established by proof unless the amount is . . . susceptible of
mathematical computation.” KPS, 318 F.3d at 19. At the same time, the First Circuit
recently reiterated that a trial court may forego a hearing when “the judgment
amount involves nothing more than arithmetic.” AngioDynamics, Inc. v. Biolitec AG,
780 F.3d 429, 436 (1st Cir. 2015) (quoting HMG Prop. Investors, Inc. v. Parque
Industrial Rio Canas, Inc., 847 F.2d 908, 919 (1st Cir. 1988)).
In KPS, the First Circuit wrote that it has “permitted district courts to
dispense with a Rule 55(b)(2) hearing” in unliquidated claims, but only “[i]n limited
circumstances.” 318 F.3d at 21. It noted that it had affirmed a damage award in a
case where the district court was “intimately familiar with the case from years of
travail” and where the district court “forwent a hearing and calculated damages from
‘mortgage and loan agreements, certifications by the taxing authorities, and other
documents of record.’” Id. at 21 (quoting HMG, 847 F.2d at 919).
From this Court’s perspective, acting in its discretion, a foreclosure complaint
is not the type of civil action that typically should be resolved without a formal
hearing and notice to the defaulted and interested parties.
In fact, in other
foreclosure cases, the Court has required the mortgagee to give notice of the time,
date and place of the hearing to the defaulted parties, and it has required the
mortgagee to appear at a hearing and present evidence from which the Court could
determine whether it is entitled to the relief requested. See United States v. Spencer,
Civil No. 1:17-cv-00005-JAW, Order on Pls.’ Mots. for Default J. (ECF No. 20) (D. Me.
Apr. 10, 2017); Nationstar v. Saunders, Civil No. 16-cv-00426, Order on Pl.’s Mot. for
Default J. (ECF No. 18) (D. Me. Apr. 4, 2017).
A foreclosure action is serious business. As a foreclosure action involves title
to real estate, it is vital that title to the mortgaged property is transferred cleanly to
the mortgagee so that the mortgagee may in turn transfer the property
unencumbered by flaw to the next purchaser, that the mortgagors are truly in default,
that if the mortgagors are going to lose their legal interest in their own property,
often a residence, that the mortgagee is legally entitled to foreclose the property and
that the mortgagors’ interests have been properly addressed, that the notice to cure
default has been given to the mortgagors of a residential property as required by
Maine law, 14 M.R.S. § 6111, that any interested parties as defined by Maine law, 14
M.R.S. § 6321, have been duly notified and that their interests have been properly
resolved, that if there are interested parties, the priority order of their interests is
correctly determined, that the amount of the default judgment has been calculated
accurately, especially if the mortgagee is seeking a potential deficiency judgment, 14
M.R.S. § 6323(1), that the public utility easements, if any, have been properly
accounted for, that the applicable statutory and procedural periods of time have been
strictly observed, and that the amount of attorney’s fees and costs, if any, have been
properly assessed and approved.
TD Bank cited no case and the Court is aware of none, where a mortgagee has
proceeded to judgment without the “hearing” that 14 M.R.S. § 6321 requires and that
Rule 55(b)(2) suggests, or, put another way, where a motion for default judgment
without a hearing has satisfied the hearing requirements of the state statute and the
hearing preference of the federal rule.
Regarding its motion for default judgment, if it wishes to do so, TD Bank may
proceed with a hearing on its motion for default judgment. If TD Bank elects to
proceed with a hearing in court, the Court will require TD Bank to provide notice to
Isabelle Rankin and William Rankin as well as any other interested parties of the
date, time, and place of the hearing to allow them to appear, if they wish to do so, and
contest TD Bank’s claimed relief.
Finally, at the hearing, TD Bank will be given an opportunity to explain
whether certain other requirements of Maine’s foreclosure statute have been
complied with and, if not, what effect the omissions have on TD Bank’s right to
proceed with the foreclosure. First, Maine law requires that the “complaint must . .
. describe the mortgaged premises intelligibly, including the street address of the
mortgaged premises, if any, which must be prominently stated on the first page of
the complaint . . . .” 14 M.R.S. § 6321. Here, the street address of the mortgaged
property does not appear until the second page of the Complaint. Compl. at 1–2.
Second, Maine law requires that the “complaint must . . . state the amount due on
the mortgage . . . .”
14 M.R.S. § 6321. Here, the only figure in the complaint is the
judgment sought, with no prior explanation of the amount due, or a breakdown of
that figure into principal, interest, or other fees. Compl. at 3. Third, a mortgagee
that has been merged since the original mortgage is generally required to provide
evidence that it is the legal successor to the financial institution whose name appears
on the original mortgage. Here, other than alleging that TD Bank is the successor to
TD Banknorth, Compl. at 2, there are no documents that confirm this allegation.
Fourth, Maine law requires that the mortgagee must “within 60 days of commencing
the foreclosure also record a copy of the complaint or a clerk’s certificate of the filing
of the complaint in each registry of deeds in which the mortgage deed is or by law
ought to be recorded.” 14 M.R.S. § 6321. There is no indication in the Complaint that
TD Bank complied with this part of Maine’s foreclosure law.
The Court will DEFER ruling on TD Bank’s Motion for Default Judgment (ECF
No. 11) for two weeks to give TD Bank an opportunity to determine how it wishes to
proceed. If TD Bank does not respond within two weeks, the Court will dismiss the
motion for default judgment without prejudice.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
UNITED STATES DISTRICT JUDGE
Dated this 28th day of August, 2017
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