Title: HSBC Bank USA, N.A. v. Gabay

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
 
 
 
 
Reporter of Decisions 
Decision: 
2011 ME 101 
Docket: 
Cum-10-581 
Submitted 
  On Briefs: 
April 27, 2011 
Decided: 
September 15, 2011 
  
Panel: 
SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, 
JJ. 
 
 
HSBC BANK USA, N.A., AS TRUSTEE UNDER THE POOLING AND 
SERVICING AGREEMENT DATED AS OF DECEMBER 1, 2005, FREMONT 
HOME LOAN TRUST 2005-E 
 
v.  
 
JANELLE GABAY 
 
 
ALEXANDER, J. 
 
 
[¶1]  Janelle Gabay appeals from a summary judgment entered in the District 
Court (Bridgton, Powers, J.) in favor of HSBC Bank USA, N.A., as Trustee under 
the Pooling and Servicing Agreement dated as of December 1, 2005, Fremont 
Home Loan Trust 2005-E, on HSBC’s complaint for foreclosure and sale pursuant 
to 14 M.R.S. §§ 6321-6325 (2010).1  Gabay argues that HSBC’s motion for 
summary judgment should have been denied because HSBC’s statement of 
material facts left unresolved genuine issues of material fact as to (1) whether 
                                               
 
1  HSBC filed its complaint in January 2009, before amendments to 14 M.R.S. §§ 6321-6325 became 
effective, but it filed its summary judgment motion on July 27, 2010, after the amendment’s effective 
date.  See P.L. 2009, ch. 402, §§ 17-20 (effective June 15, 2009); see also P.L. 2009, ch. 476, §§ B-5 to 
B-9 (emergency, effective Feb. 24, 2010, applying retroactively to June 15, 2009).  “[N]ew statutes and 
rules will . . . apply to summary judgment motions filed after their effective dates, regardless of when the 
foreclosure action was commenced.”  Chase Home Fin. LLC v. Higgins, 2009 ME 136, ¶ 11 n.2, 985 
A.2d 508. 
 
 
2 
HSBC is the owner and holder, pursuant to a valid endorsement, of the promissory 
note due to HSBC’s failure to present adequate evidence of such; (2) the order of 
priority among creditors; (3) the sufficiency of identification of the court costs that 
HSBC sought to collect; and (4) the identification of the premises to be foreclosed 
upon.  Because genuine issues of material fact exist, we vacate the judgment and 
remand for further proceedings. 
I.  CASE HISTORY 
[¶2]  Janelle Gabay resides in Florida.  She owns real property in Maine 
located at 19 Common Way Road in Naples.2  On or about September 23, 2005,3 
Gabay executed and delivered a promissory note in the principal amount of 
                                               
 
2  Except as otherwise noted, the facts are taken from HSBC’s unopposed statement of material facts, 
see M.R. Civ. P. 56(h)(4), but only to the extent that the facts included in that statement are properly 
supported by references to the record, see Levine v. R.B.K. Caly Corp., 2001 ME 77, ¶¶ 6, 8-9, 770 A.2d 
653 (stating that a statement of material facts “must . . . contain specific record references to each 
proffered fact” and that the “record references must refer to evidence of a quality that could be admissible 
at trial”) (emphasis in original). 
 
HSBC cites to portions of its complaint to support, in whole or part, two of its statements of material 
fact.  Although the parties in this case both agree that HSBC cannot support a statement of material fact 
by record references to its own complaint, citing Deutsche Bank Nat’l Trust Co. v. Raggiani, 2009 ME 
120, ¶ 6, 985 A.2d 1 (“A party’s citation to its own complaint is insufficient to support a material fact.”), 
we observe that Gabay did not file an answer to HSBC’s unverified complaint.  Generally, Gabay’s 
failure to deny averments in HSBC’s complaint results in treating the averments as admitted.  See M.R. 
Civ. P. 8(d); Casco N. Bank, N.A. v. Estate of Grosse, 657 A.2d 778, 781 (Me. 1995).  However, 
averments in HSBC’s complaint are read strictly and are only deemed to support a statement of material 
fact if the specific reference cited properly supports the material fact.  
 
3  HSBC’s statement of material facts states that Gabay executed and delivered the promissory note 
“[o]n or about August 1, 2006,” but the record reference in support of that statement of material fact states 
that the note was executed and delivered on or about September 23, 2005, which is also the date stated on 
the copy of the note included in the summary judgment record.  Because of the inaccuracy of the 
statement of material fact, we would be within our province to disregard it.  However, Gabay has not 
challenged that statement of material fact, and we do not focus on it given that we vacate the judgment on 
other grounds. 
 
 3 
$750,000 to Fremont Investment and Loan.  To secure the note, Gabay executed 
and delivered a mortgage of “certain real property located in Naples, Cumberland 
County, Maine” to Mortgage Electronic Registration Systems, Inc. (MERS) on 
September 23, 2005, which mortgage was recorded.4  Although the mortgage 
agreement, cited as support for HSBC’s statement of material fact stating that the 
mortgage related to “certain real property located in Naples, Cumberland County, 
Maine,” identifies the mortgaged property by street address, HSBC’s statement of 
material facts does not specifically identify the property that is subject to the note 
and mortgage by street address.  
[¶3]  Gabay defaulted on the note and was in breach of the mortgage 
agreement when she failed to make the monthly payments due on the note 
beginning on September 1, 2008.  A notice of the default dated October 17, 2008, 
was sent to Gabay, advising her of her opportunity to cure and of the intent to 
accelerate the maturity date of the note if the default was not cured.  HSBC is the 
current holder of the mortgage.  Although not stated in the statement of material 
facts itself, record references indicate that HSBC became the holder of the 
mortgage by virtue of an assignment from MERS dated December 22, 2008.  
HSBC stated in its statement of material facts that it is also the current holder of 
                                               
 
4  Fremont Investment is identified in the note as the “Lender.”  There is no mention of Mortgage 
Electronic Registration Systems, Inc. (MERS) in the note.  The mortgage agreement states that MERS is 
the nominee of the Lender, identified as Fremont Investment.   
 
4 
the note, although, for reasons discussed below, the citations offered in support of 
that fact do not properly support that statement.   
[¶4]  As of June 23, 2010, a total of $851,235.39 was due under the note and 
secured by the mortgage, with interest accruing at $169.64 per day, plus costs of 
collection, “including reasonable attorneys’ fees and costs.”  Attorney fees 
consisted of a flat fee of $1500 for an uncontested foreclosure action requiring 
summary judgment.  The terms of the mortgage provide that the lender has the 
right to collect all costs allowed by law, including reasonable attorney fees and 
costs of title evidence.   
[¶5]  On January 6, 2009, HSBC filed a complaint for foreclosure and sale 
against Gabay, naming Lake Sebago Estates Homeowners Association (the 
Association) as a party-in-interest.5  HSBC did not reference the Association in its 
statement of material facts.  According to his sworn certification, a deputy sheriff 
in Pinellas County, Florida, personally served a copy of the complaint and 
summons on Gabay in February 2009.  Gabay did not file an answer. 
[¶6]  HSBC filed a motion for summary judgment on July 27, 2010.  
HSBC’s statement of material facts was supported primarily by record references 
to an affidavit of a foreclosure manager at HSBC (the Lender affidavit).  Gabay did 
not file an opposition to HSBC’s summary judgment motion.  On August 25, 2010, 
                                               
 
5  The Association filed a notice of lien against the property to secure unpaid fees, charges, and 
interest.   
 5 
the court granted HSBC’s motion for summary judgment.  The court ordered 
Gabay to pay $852,735.39 within ninety days of the entry of judgment, and, if 
payment was not timely made, ordered the sale of the property.    
[¶7]  Gabay sought and was granted an enlargement of time pursuant to 
M.R. App. P. 2(B)(5) to file a notice of appeal from the judgment of foreclosure 
and sale.  Gabay stated that, notwithstanding the Florida sheriff’s certification, she 
had not been served with the complaint, had not received a copy of HSBC’s 
motion for summary judgment, and had no knowledge of the foreclosure action 
until she received a copy of the court’s judgment in September 2010.6  Gabay filed 
a notice of appeal on October 12, 2010, which the District Court deemed timely 
filed.7   
                                               
 
6   By the time Gabay received the judgment and claimed first knowledge of the foreclosure action, the 
record indicates that no payments had been made on the note, and the mortgage had been in default, for 
more than two years. 
 
7  HSBC argues that Gabay’s appeal should be rejected for procedural reasons because she filed an 
appeal without first moving for relief from judgment pursuant to M.R. Civ. P. 55(c) or 60(b), citing 
primarily to opinions involving the entry of a default judgment rather than a summary judgment.  We 
disregard arguments concerning Rule 55 because it applies only after the entry of default or default 
judgment.  Despite Gabay’s failure to answer the complaint, HSBC did not seek the entry of a default.  
Additionally, while we have declined to exercise appellate jurisdiction on direct appeal in circumstances 
in which it would have been appropriate for a defaulted party to file a post-judgment motion pursuant to 
Rule 60(b) based on “prudential or procedural concerns rather than jurisdictional limitations,” Fleet 
Mortg. Corp. v. Cobb, 611 A.2d 565, 566 (Me. 1992), we do not find the same prudential or procedural 
concerns in this case following entry of a summary judgment, as opposed to entry of a default judgment.  
Summary judgment practice in foreclosure cases requires that the trial court examine the merits of the 
plaintiff’s materials filed in support of summary judgment regardless of any inadequacies in a defendant’s 
opposition to summary judgment.  Accordingly, we address the merits of this appeal. 
 
6 
II.  LEGAL ANALYSIS 
 
[¶8]  We review a grant of summary judgment de novo, viewing the 
evidence in the light most favorable to the nonmoving party to determine “whether 
the parties’ statements of material facts and the referenced record evidence reveal a 
genuine issue of material fact.”  JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 15, 
10 A.3d 718.  In so doing, we consider only the material facts set forth, and the 
portions of the record referred to, in the statements of material facts.  Salem 
Capital Grp., LLC v. Litchfield, 2010 ME 49, ¶ 4, 997 A.2d 720.  In summary 
judgment practice, the court “is neither required nor permitted to independently 
search a record to find support for facts offered by a party.”  Levine v. R.B.K. Caly 
Corp., 2001 ME 77, ¶ 9, 770 A.2d 653.  A party’s motion for summary judgment 
may not be granted if that party fails to properly put the material facts before the 
court, “regardless of the adequacy, or inadequacy, of the nonmoving party’s 
response.”   Id. ¶ 5. 
 
[¶9]  HSBC contends that it need not properly identify which paragraph of a 
supporting record reference is the basis for a particular statement of material fact 
when (i) the supporting record is included in its entirety in the summary judgment 
record, or (ii) the critical paragraph in the record has been cited to support a 
different material fact.  However, our rules require that each statement of material 
fact must directly refer the court to “the specific portions of the record from which 
 7 
each fact is drawn.”  Id. ¶ 9; M.R. Civ. P. 56(h)(1), (4).  We have repeatedly noted 
the importance of applying the summary judgment rules strictly in the context of 
mortgage foreclosures.  See HSBC Mortg. Servs., Inc. v. Murphy, 2011 ME 59, ¶ 9, 
19 A.3d 815; JPMorgan Chase Bank, 2011 ME 5, ¶ 15, 10 A.3d 718. 
 
[¶10]  “In residential mortgage foreclosure actions, certain minimum facts 
must be included in a mortgage holder’s statement of material facts on summary 
judgment.”  HSBC Mortg. Servs., 2011 ME 59, ¶ 9, 19 A.3d 815; see also M.R. 
Civ. P. 56(j).  To support a summary judgment motion in a residential mortgage 
foreclosure action, the mortgage holder must include, at a minimum, the following 
facts in its statement of material facts, each supported by evidence of a quality that 
could be admissible at trial: 
(1)  The 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; 
 
(2)  Properly presented proof of ownership of the mortgage note and 
the mortgage, including all assignments and endorsements of the note 
and the mortgage; 
 
(3)  A breach of condition in the mortgage; 
 
(4)  The amount due on the mortgage note, including any reasonable 
attorney fees and court costs; 
 
(5)  The order of priority and any amounts that may be due to other 
parties in interest, including any public utility easements; 
 
(6)  Evidence of properly served notice of default and mortgagor’s 
right to cure in compliance with statutory requirements; 
 
8 
 
(7)  After January 1, 2010, proof of completed mediation (or waiver or 
default of mediation), when required, pursuant to the statewide 
foreclosure mediation program rules; and 
 
(8)  If 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. 
 
HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19 A.3d 815; Chase Home Fin. LLC v. 
Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508; see also M.R. Civ. P. 56(j) (providing, 
among other things, that a summary judgment may not be entered in a foreclosure 
action unless it is determined that “the plaintiff has properly certified proof of 
ownership of the mortgage note and produced evidence of the mortgage note, the 
mortgage, and all assignments and endorsements of the mortgage note and the 
mortgage”). 
 
[¶11]  Our analysis focuses on the first, second, fourth, and fifth 
requirements listed above.  We begin our discussion with the second requirement. 
A. 
Ownership and Endorsement of the Note 
 
[¶12]  As noted above, HSBC is required to include the following 
properly-supported facts in its statement of material facts: “properly presented 
proof of ownership of the mortgage note . . . , including all assignments and 
endorsements of the note . . . .”  HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19 
A.3d 815; Chase Home Fin., 2009 ME 136, ¶ 11, 985 A.2d 508. 
 9 
 
[¶13]  In its statement of material facts, HSBC asserts that it is the “current 
holder of the Note,” citing to paragraph seven of its complaint and to paragraph 
four of the Lender affidavit.  There are multiple deficiencies in this statement of 
material fact as it concerns proof of ownership of the note.   
 
[¶14]  First, neither of the citations included to support the bare factual 
statement that HSBC is the current holder of the note properly supports that factual 
statement.  The cited paragraph of the Lender’s affidavit refers only to HSBC’s 
being the current holder of the mortgage.  The cited paragraph of the complaint 
asserts that “[HSBC] is the current holder of the Note and Mortgage by virtue of an 
assignment dated on or about December 22, 2008.”  However, the assignment 
expressly referred to in that averment, which assignment was not attached to the 
complaint but which is included in the summary judgment record, did not assign 
the note to HSBC.  The December 22, 2008, assignment, entitled “ASSIGNMENT 
OF MORTGAGE,” assigned MERS’s interest in the mortgage, but not the note, to 
HSBC.8   
[¶15]  While an averment in a complaint that a defendant has failed to deny 
is generally deemed admitted, see M.R. Civ. P. 8(d), the statement in HSBC’s 
                                               
 
8  The December 22, 2008, assignment also states that MERS “does hereby grant, bargain, sell, assign, 
transfer, and set over” the mortgage to HSBC “together with the mortgage note secured thereby,” but the 
summary judgment record does not show that MERS had an interest in the note that it could assign to 
HSBC.  In fact, HSBC relies on a document in the summary judgment record that purports to be an 
endorsement of the note, but the endorsement is signed by a vice president of Fremont Investment and 
Loan, making the note payable to HSBC.  If we were to give this endorsement any credence, it would 
undermine any argument that MERS had an interest in the note that it could and did assign to HSBC. 
 
10 
complaint that it is the current holder of the note pursuant to the December 22, 
2008, assignment is not sufficiently supported in the context of a residential 
mortgage foreclosure proceeding.  When, as here, the mortgage-holder must 
strictly comply with the requirements of 14 M.R.S. §§ 6321-6325 and M.R. Civ. P. 
56(j), the paragraph of HSBC’s complaint cited in support of HSBC’s statement of 
material facts providing that it is the current holder of the note does not properly 
support that fact. 
 
[¶16]  An additional deficiency in HSBC’s statement of material facts is that 
HSBC failed to include any facts relating to “properly presented proof of . . . all 
assignments and endorsements of the note.”  Chase Home Fin., 2009 ME 136, 
¶ 11, 985 A.2d 508.  HSBC was required to provide such proof, as it is undisputed 
that the note was originally executed and delivered to Fremont Investment.  HSBC 
suggests in its brief, but does not specify in its statement of material facts, that the 
summary judgment record contains evidence of a valid endorsement of the note to 
HSBC including (1) paragraph two of the Lender’s affidavit, which states that 
HSBC holds the note pursuant to a special endorsement, and (2) a copy of the 
purported endorsement itself, included in the record as a separate page 
accompanying, but not discernably affixed to, a photocopy of the note.  Because 
the statement of material facts contains no fact concerning properly presented 
proof as to any endorsement of the note, however, much less a statement supported 
 11 
by proper record references, we will not independently search the record to find 
such evidence, see id. ¶ 12 n.4; Levine, 2001 ME 77, ¶ 9, 770 A.2d 653, and HSBC 
would not be entitled to judgment as a matter of law.   
 
[¶17]  Our statement that we will not, and trial courts should not, 
independently search a record to find evidence to support a party’s claim when that 
claim is insufficiently referenced in that party’s statement of material facts is no 
mere technicality to make summary judgment practice more difficult.  Certainly in 
each individual case it can be argued, as HSBC argues here, that review of the 
entire record, with the specific facts now identified in the brief on appeal, 
demonstrates that there really is no material fact in dispute.  Such arguments 
illustrate the need to identify material facts with specific citations to the record in 
the statement of material facts filed in the trial court.  If an essential fact can be 
stated, with a proper record reference, in a brief on appeal, that fact could have and 
should have been stated, with a proper record reference, in the statement of 
material facts filed in the trial court.  Before easy identification by brief on appeal, 
the information to make an inadequate statement of material facts complete may 
have been locatable only by a search of a record of fifty, one hundred, or more 
pages.  Placing every material fact in the statement of material facts, with a proper 
record citation, as the rules require, avoids the necessity for such a time-consuming 
search.  Trial courts, who may have to consider multiple motions for summary 
 
12 
judgment at a time, could be considerably burdened searching for facts through 
hundreds of pages of records, if the rules requiring complete, properly supported 
statements of material facts are not enforced on appeal.   
[¶18]  Because HSBC’s statement of material facts fails to properly present 
proof of ownership of the mortgage note, including all assignments and 
endorsements of the note, genuine issues of material fact regarding HSBC’s 
ownership of the note exist, precluding entry of judgment as a matter of law.   
B. 
Identification of the Premises  
 
[¶19]  Gabay argues that HSBC relies upon documents in the summary 
judgment record to provide an adequate description of the mortgaged premises, but 
that the documents relied upon, primarily the mortgage agreement, fail to state a 
comprehensive, complete description of the premises to be foreclosed because the 
sixth page of the addendum to the mortgage agreement appears to be missing.  
Gabay argues generally that HSBC has not met the requirement that it provide “an 
adequate description of the mortgaged premises, including the street address, if 
any.”  HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19 A.3d 815; Chase Home Fin., 
2009 ME 136, ¶ 11, 985 A.2d 508. 
 
[¶20]  Contrary to Gabay’s assertion, the supporting documentation in the 
form of the mortgage agreement and addendum adequately states the “existence of 
the mortgage, including the book and page number of the mortgage, and an 
 13 
adequate description of the mortgaged premises, including the street address.”  
Despite the availability of the requisite information in documents in the record, 
however, there is a deficiency in HSBC’s statement of material facts.   
 
[¶21]  The first statement of material fact states that Gabay “is the owner of 
real property located in Cumberland County at 19 Common Way Road, Naples.”  
However, the fact that an individual owns real property at a particular location 
does not establish that the identified property is the mortgaged property, 
particularly when, as here, the defendant may own more than one parcel of real 
estate.  The third statement of material fact states that Gabay executed and 
delivered a mortgage “of certain real property located in Naples, Cumberland 
County, Maine, which Mortgage was recorded in the Cumberland County Registry 
of Deeds” at a certain book and page number.  The statement of material facts does 
not, however, specifically link the two facts, i.e., to state outright that the property 
owned by Gabay and identified as located at 19 Common Way Road in Naples is, 
in fact, the mortgaged premises, which mortgage is recorded at a particular book 
and page number.  
 
[¶22]  The rule is straightforward.  “Facts not set forth in the statement of 
material facts are . . . not in the summary judgment record,” even if the fact in 
question can be gleaned from affidavits or other documents attached to, and even 
referred to in portions of, a statement of material fact.  Chase Home Fin., 2009 ME 
 
14 
136, ¶ 12 & n.4, 985 A.2d 508.  Viewing HSBC’s statement of material facts in a 
light most favorable to Gabay, as we must, HSBC’s statement of material facts 
does not contain an adequate description of the mortgaged premises including a 
street address.  See HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19 A.3d 815; Chase 
Home Fin., 2009 ME 136, ¶ 11, 985 A.2d 508. 
C. 
Order of Priority  
 
[¶23]  A mortgage holder’s statement of material facts must include “the 
order of priority and any amounts that may be due to other parties in interest, 
including any public utility easements.”  HSBC Mortg. Servs., 2011 ME 59, ¶ 9 
n.6, 19 A.3d 815; Chase Home Fin., 2009 ME 136, ¶ 11, 985 A.2d 508.  
 
[¶24]  The court file reveals a variety of court filings, including the 
complaint and an affidavit filed by the Association a month after HSBC filed its 
motion for summary judgment, that provide information concerning the 
Association’s having an interest in or a lien on the subject property and the amount 
due to the Association.  The information in these documents was not, however, 
incorporated into the summary judgment record because HSBC’s statement of 
material facts fails to include “the order of priority and any amounts that may be 
due to other parties in interest,” as required.   
 
[¶25]  A court will consider only those facts set forth in a statement of 
material facts, as included in the summary judgment record, and will not consider 
 15 
facts submitted outside of the summary judgment process.  Chase Home Fin., 2009 
ME 136, ¶ 12 n.4, 985 A.2d 508; Camden Nat’l Bank v. Peterson, 2008 ME 85, 
¶ 26, 948 A.2d 1251 (holding that the court erred in granting a summary judgment 
to a bank in a foreclosure action when the court considered deposition transcripts 
and an exhibit the bank submitted outside of the Rule 56 process after it filed its 
statement of material facts).  Viewing the summary judgment record in a light most 
favorable to Gabay, a genuine issue of material fact exists as to the order of 
priority and amounts due to other parties-in-interest. 
D. 
Costs 
 
[¶26]  A mortgage holder’s statement of material facts must include “the 
amount due on the mortgage note, including any reasonable attorney fees and court 
costs.”  HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19 A.3d 815; Chase Home Fin., 
2009 ME 136, ¶ 11, 985 A.2d 508. 
 
[¶27]  HSBC states in its statement of material facts that it is entitled to 
collect “all reasonable expenses of this proceeding, including reasonable attorney’s 
fees and costs,” citing to paragraph eight of the Lender’s affidavit and to the 
mortgage agreement, but the statement of material fact and the supporting record 
references do not specify what those costs are.  Although documents in the 
summary judgment record contain information as to costs, included in an attorney 
affidavit referring to $722 in costs-to-date, HSBC failed to state the amount of 
 
16 
costs in its statement of material facts and to cite to the attorney affidavit in support 
of its statement concerning costs.  The amount of costs due as part of the amount 
due on the mortgage was not, therefore, included in the summary judgment record 
as required.  See Chase Home Fin., 2009 ME 136, ¶ 12 n.4, 985 A.2d 508.  
 
The entry is: 
Summary judgment vacated.  Remanded for 
further proceedings. 
 
 
 
 
 
 
 
 
On the briefs: 
 
Geoffrey S. Lewis, Esq., Hastings Law Office, P.A., Fryeburg, 
for appellant Janelle Gabay 
 
Elizabeth M. Crowe, Esq., Bendett & McHugh, P.C., 
Farmington, Connecticut, for appellee HSBC Bank USA, N.A., 
as Trustee Under the Pooling and Servicing Agreement Dated 
as of December 1, 2005, Freemont Home Loan Trust 2005-E 
 
 
 
Bridgton District Court docket number RE-2009-1 
FOR CLERK REFERENCE ONLY