FREEDOM MORTGAGE CORPORATION v. MAINE REVENUE SERVICES et al

Filing 35

ORDER ON MOTION TO CONTINUE AND ORDER TO SHOW CAUSE granting 34 Motion to Continue. Deadline to proceed with default judgment on documentary evidence extended to 9/11/2020. Show cause response due by 7/30/2020. By JUDGE JOHN A. WOODCOCK, JR. (CCS)

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UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
FREEDOM MORTGAGE
CORPORATION,
Plaintiff,
v.
JOHN A. LIPPINCOTT et al.,
Defendants,
RIVERVIEW HOMEOWNERS
ASSOCIATION, INC,
Party-in-Interest.

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ORDER ON MOTION TO CONTINUE
AND ORDER TO SHOW CAUSE
On April 23, 2019, Freedom Mortgage Corporation (FMC) filed a complaint for
foreclosure against John A. Lippincott and Maine Revenue Services (MRS). Compl.
(ECF No. 1). On April 25, 2019, FMC served Mr. Lippincott and on April 30, 2019,
FMC served MRS. Proof of Service (ECF No. 7); Proof of Service (ECF No. 8). On
May 15, 2019, MRS filed its answer. Answer (ECF No. 9). On June 17, 2019, FMC
filed a motion for entry of default as to Mr. Lippincott. Pl.’s Mot. for Entry of Default
as to John A. Lippincott (ECF No. 10). The Deputy Clerk of Court granted the entry
of default that same day. Order Granting Mot. for Entry of Default (ECF No. 11).
On July 16, 2019, FMC filed a motion to amend its complaint to add Marion B.
Lippincott as a defendant and Riverview Homeowners Association, Inc. (RHA) as a
party-in-interest; MRS and RHA consented to the motion. Consented Mot. to Amend

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Compl. (ECF No. 12). On July 17, 2019, FMC filed a motion to continue the deadline
for filing a motion for default judgment against Mr. Lippincott. Mot. to Continue
(ECF No. 13). On July 18, 2019, the Magistrate Judge granted the motions to amend
and to continue. Order Granting Mot. to Amend Compl. (ECF No. 14); Order Granting
Mot. to Continue Deadline to Req. Default J. (ECF No. 15). That same day, FMC filed
its amended complaint. Am. Compl. (ECF No. 16). FMC served Ms. Lippincott on
July 25, 2019, and served RHA on July 31, 2019. Proof of Service (ECF No. 18); Aff.
of Service (ECF No. 20). MRS answered the amended complaint on August 12, 2019,
and RHA answered on August 21, 2019. State of Maine, Maine Revenue Services’s
Answer to Am. Compl. (ECF No. 19); Answer (ECF No. 22).
On September 16, 2019, FMC filed a motion for entry of default as to Ms.
Lippincott. Pl.’s Mot. for Entry of Default as to Marian B. Lippincott (ECF No. 24).
The Deputy Clerk of Court granted the motion that same day. Order Granting Mot.
for Entry of Default (ECF No. 25). On November 12, 2019, FMC filed a motion for
default judgment as to Mr. and Ms. Lippincott. Pl.’s Mot. for Default J. as to John A.
Lippincott and Marian B. Lippincott (ECF No. 26). On February 24, 2020, the Court
issued an order on FMC’s motion for default judgment, reserving ruling on the motion
but scheduling a damages hearing. Order on Pl.’s Mot. for Default J. (ECF No. 28).
On March 10, 2020, FMC filed a motion to continue the damages hearing due to the
COVID-19 pandemic. Mot. to Continue (ECF No. 31). The Court granted the motion
to continue on March 16, 2020. Order Granting Mot. to Continue Damages Hr’g (ECF
No. 32).

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On April 13, 2020, in light of the COVID-19 pandemic, the Court issued a
procedural order, allowing FMC to proceed to default judgment by submitting
documentary evidence that would demonstrate it was entitled to foreclosure rather
than requiring a formal default hearing. Foreclosure Procedural Order Authorizing
Pl. to Seek Default J. on Documentary Evid. (ECF No. 33). The procedural order set
deadlines for FMC to proceed with the pending motion for default judgment. Id. Now
before the Court is FMC’s first motion to continue by sixty days the deadline to
proceed with default judgment set by the procedural order.

Mot. to Continue

Procedural Order Deadline by Sixty (60) Days (ECF No. 34). The Court GRANTS
FMC’s motion to continue.
Despite granting the motion to continue, the Court issues this Order to Show
Cause why the motion for default judgment should not be dismissed without
prejudice. The motion for default judgment has now been pending for nearly eight
months and the Court does not encourage stale motions to linger on the docket. If
FMC takes the full sixty days of continuance, the motion will have been pending for
nearly ten months. The presence of an unacted upon motion on the court docket
invites mistake and absorbs clerical and judicial time to keep track of its presence.
There may be a special reason in this case that the Court should not dismiss the
motion for entry of default judgment without prejudice and if there is, the Court
invites FMC to say so.

If the Court dismisses the pending motion for default

judgment, it will be without prejudice, so that FMC will be free to refile its motion for

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default judgment on, or after, September 11, 2020. FMC shall respond to this Order
to Show Cause within twenty-one days of the date of this Order.
To avoid a potential complication that is apparent on the face of the Complaint,
the Court also notes that FMC does not demand a sale in the amended complaint.
See 14 M.R.S.A. § 6321 (stating that a foreclosure complaint must “demand a
foreclosure and sale”).

At present, FMC’s amended complaint only demands a

foreclosure. See Am. Compl. ¶ 30 (“By virtue of the Defendants’ breach of condition,
the Plaintiff hereby demands a foreclosure on said real estate”). Notwithstanding the
sixty-day period of continuance, the Court ORDERS FMC within twenty-one days of
the date of this Order to file a response with the Court explaining why this error does
not require amendment or how it intends to cure this apparent defect.
If FMC elects to amend its complaint, the Court directs its attention to TD
Banknorth, N.A. v. Hawkins, 2010 ME 104, ¶22, 5 A.3d 1042, in which the Maine
Supreme Judicial Court held that “when a complaint is amended, any default on the
initial complaint, even as to claims unaltered by the amendment, must be set aside
and the defendant be given an opportunity to respond to the amended complaint . . ..”
Additionally, the Law Court stated in dicta that several of the United States District
Court opinions on which it relied “support the proposition that an amended complaint
replaces the initial complaint, and therefore voids any default entered on the initial
complaint, without regard to the nature or extent of the amendments.” Id. ¶ 21.
As it is on a procedural issue, the TD Banknorth ruling is not binding on this
Court. See In re New Motor Vehicles Canadian Exp. Antitrust Litig., 235 F.R.D. 127,

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133 n.13 (D. Me. 2006) (stating that “[i]t is now clearly established that the Federal
Rules of Civil Procedure . . . are to be applied by the federal court [in diversity cases],
even if there is a conflicting state requirement and even if the application of the
federal Rule might determine the outcome of the case” (some alterations in original)
(quoting ERWIN CHEMERINSKY, FEDERAL JURISDICTION § 5.3, at 317–18 (4th ed.
2003))). The Court has not found a First Circuit ruling on this issue; however, the
Law Court in TD Banknorth cites a collection of federal district court cases in support
of its holding, 2010 ME 104, ¶ 19-21, and the TD Banknorth decision has been cited
favorably in the Districts of Maine, see Arayos LLC v. Sydkal Inc., 1:14-CV-00060NT, 2014 WL 12772198, at *1 (D. Me. Aug. 11, 2014), and New Hampshire. See S.E.C.
v. Boey, No. 1:07-CV-00039-SM, 2013 WL 1775444, at *1 (D.N.H. Apr. 25, 2013).
One possible impact of TD Banknorth is that the Court should dismiss FMC’s
motion for default judgment and FMC should serve its amended complaint, let the
time for answering the amended complaint fully run, and, if the defendants do not
respond, file a new entry of default and motion for default judgment once the
currently defaulted parties have defaulted anew. Another possible interpretation is
that technical alterations of a complaint which make no substantive changes, such as
the alterations at issue here, do not invalidate a previously-entered default. Absent
objection, the Court will follow the first interpretation. 1 To the extent FMC objects,

The Court also notes that, under this interpretation, Mr. Lippincott has not yet been defaulted
as to the amended complaint, which included a new party-in-interest and therefore arguably had a
substantive effect on the claim against him. If this is the case, then Mr. Lippincott is not a properly
defaulted party and a motion for default judgment against him is improper. If FMC decides not to
amend its complaint, it should include in its response to the Court’s order to show cause an explanation
for why the default against Mr. Lippincott stands as against the amended complaint.

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the Court ORDERS FMC to file a motion explaining why the latter interpretation
applies to this case within twenty-one days of this Order. Finally, the Court also
ORDERS FMC to state its position about whether it can take any action on the
apparent flaw in the Complaint during the next sixty days, given the continuance and
its stated bases for the sixty-day continuance, and, if FMC takes the position that it
can do nothing about the potential flaw in the Complaint, how it intends to proceed
in light of the apparent flaw.
SO ORDERED.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
UNITED STATES DISTRICT JUDGE
Dated this 9th day of July, 2020

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