Title: Federal National Mortgage Association v. Deschaine

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2017 ME 190 
Docket: 
Pen-16-316 
Argued: 
May 12, 2017 
Decided: 
September 7, 2017 
Revised: 
December 7, 2017 
 
Panel: 
ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ. 
 
 
FEDERAL NATIONAL MORTGAGE ASSOCIATION 
 
v. 
 
PATRICIA W. DESCHAINE et al. 
 
 
HJELM, J. 
[¶1]  In 2012, a complaint for residential foreclosure filed by Federal 
National Mortgage Association (Fannie Mae) against Patricia W. Deschaine 
and Paul J. Deschaine was dismissed with prejudice because the parties failed 
to comply with the court’s pretrial order.  Fannie Mae did not seek 
post-judgment or appellate relief, and so the judgment became final.  The 
following year, Fannie Mae filed a second complaint for foreclosure involving 
the same property, based on the same note and mortgage, and against the 
same mortgagors.  The Superior Court (Penobscot County, Anderson, J.) 
ultimately granted the Deschaines’ motion for summary judgment on Fannie 
Mae’s complaint and on their counterclaims to quiet title and for a declaratory 
judgment, and denied Fannie Mae’s cross-motion for summary judgment on 
 
2 
its complaint.  Applying our decision in Johnson v. Samson Construction Co., the 
court concluded that this second foreclosure action is barred as a matter of 
law by the judgment dismissing with prejudice the earlier foreclosure action.  
1997 ME 220, ¶ 8, 704 A.2d 866.  On this appeal by Fannie Mae, we conclude 
that the court correctly determined that this second foreclosure claim is 
precluded by principles of res judicata, and we affirm the judgment.1 
I.  BACKGROUND 
[¶2]  The summary judgment record contains the following facts, which 
are not in dispute.  See Harlor v. Amica Mut. Ins. Co., 2016 ME 161, ¶ 7, 
150 A.3d 793. 
[¶3]  In October 2004, the Deschaines executed a promissory note in 
favor of First Horizon Home Loan Corporation in the principal amount of 
$127,920.  As security for the note, the Deschaines also executed a mortgage 
on residential property located in Lincoln in favor of Mortgage Electronic 
Registration Systems, Inc. (MERS), as “nominee” for First Horizon.2  Fannie 
                                         
1  Amicus briefs have been filed by National Consumer Law Center, National Association of 
Consumer Advocates, Jerome Frank Legal Services Corporation, and Maine Attorneys Saving 
Homes; Maine Bankers Association and The National Mortgage Bankers Association; Pine Tree 
Legal Assistance; Gerald F. Petruccelli; and Doonan, Graves & Longoria, LLC.  See M.R. App. P. 9(e). 
2  Later, in April 2011, the United States Bankruptcy Court for the District of Maine (Haines, J.) 
granted the Deschaines’ petition for a discharge in bankruptcy pursuant to 11 U.S.C.S. § 727 (LEXIS 
through Pub. L. No. 115-50).  As a result of the discharge, the Deschaines can no longer be held 
personally liable for their obligations under the note and mortgage.  See 11 U.S.C.S. § 524(a)(1) 
 
3 
Mae eventually acquired the note endorsed in its favor.  MERS purported to 
assign the mortgage to Fannie Mae in June 2011, but because MERS possessed 
only the right to record the mortgage, the assignment conveyed nothing more 
than that right.  See Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶¶ 15-16, 
96 A.3d 700; Mortg. Elec. Registration Sys., Inc. v. Saunders, 2010 ME 79, 
¶¶ 9-11, 2 A.3d 289.  
[¶4]  Paragraph 7(C) of the note and Paragraph 22 of the mortgage 
contain acceleration clauses, which provide that if the borrower fails to satisfy 
an obligation under either instrument and fails to timely cure the default after 
being notified of it, the lender may require “immediate payment in full” of the 
amount then remaining unpaid under the loan documents—including the 
total balance of principal and interest under the note and any additional fees 
and charges allowed by the note and mortgage.  
[¶5]  Additionally, Paragraph 19 of the mortgage is a reinstatement 
provision, stating that “even if [the l]ender has required immediate payment 
                                                                                                                                   
(LEXIS through Pub. L. No. 115-51) (stating that a discharge in a Chapter 7 bankruptcy “voids any 
judgment any time obtained, to the extent that such judgment is a determination of the personal 
liability of the debtor with respect to any debt discharged”).  Because a discharge in bankruptcy 
does not extinguish a valid lien on a property, however, that discharge does not preclude Fannie 
Mae from enforcing its security interest in an in rem foreclosure proceeding.  See Johnson v. Home 
State Bank, 501 U.S. 78, 82-84 (1991) (“[A] discharge [in a Chapter 7 liquidation] extinguishes only 
the personal liability of the debtor. . . . [A] creditor’s right to foreclose on the mortgage survives or 
passes through the bankruptcy.” (citations and quotation marks omitted)); New Eng. Merchs. Nat’l 
Bank v. Herron, 243 A.2d 722, 726 (Me. 1968).   
 
4 
in full, [the borrower] may have the right to have enforcement of [the 
mortgage] discontinued” if, among other things, the borrower “pay[s] to 
[the l]ender the full amount that then would be due under [the mortgage] and 
the [n]ote as if immediate payment in full had never been required” before the 
earliest of the date a foreclosure judgment is issued, five days prior to the sale 
of the property, or “such other period as [a]pplicable [l]aw might specify for 
the termination of [the] right to reinstate.”  Paragraph 19 further provides 
that if the borrower exercises her right of reinstatement, “the [n]ote and this 
[s]ecurity [i]nstrument will remain in full effect as if immediate payment in 
full had never been required.”   
 
[¶6]  In September 2011, Fannie Mae issued to the Deschaines a notice 
of default and right to cure because, among other things, they had not made 
any monthly payments on the note since January 2011.  The Deschaines failed 
to pay the stated amount due—$7,719.33—by the date specified in the notice.  
As a result, in December 2011 Fannie Mae filed a foreclosure complaint in the 
District Court (Lincoln).  In its complaint, Fannie Mae alleged, “[I]n accordance 
with the terms of the [l]oan [d]ocuments, [Fannie Mae] has declared the entire 
outstanding principal amount, accrued interest thereon, and all other sums 
due under the [l]oan [d]ocuments to be presently due and payable.”  
 
5 
Specifically, Fannie Mae alleged that the amount due included a principal 
balance of $122,712.93, which, together with accrued interest, fees, and other 
charges, resulted in a total amount due of $131,944.56.  
 
[¶7]  In June 2012, the court (Stitham, J.) issued a trial management 
order stating that neither party had complied with an earlier order that had 
established a deadline for the parties to exchange witness and exhibit lists, 
and warning the parties that sanctions would be imposed if they did not 
comply with a revised deadline.  See M.R. Civ. P. 16A(a), (d) (authorizing a 
court to dismiss an action with prejudice for a party’s failure to comply with a 
pretrial order).  The following month, the court issued a judgment stating that 
there had been “no filings by either party,” and dismissed Fannie Mae’s 
foreclosure complaint “with prejudice.”  Fannie Mae did not seek any type of 
relief from the dismissal through a post-judgment motion or an appeal, and so 
the judgment became final.  
 
[¶8]  In September 2013—more than one year after the first foreclosure 
action had been dismissed—Fannie Mae sent a new notice of default to the 
Deschaines, this time stating that, among other grounds for a default, the 
Deschaines had failed to make payments on the note since February 2011.  
The Deschaines did not take the actions specified in the notice to cure the 
 
6 
purported default, and in December 2013 Fannie Mae filed a complaint in the 
Superior Court (Penobscot County), which, as later amended, requested a 
judgment of foreclosure and other relief based on theories of equitable 
mortgage and unjust enrichment.3  In both the original and amended 
complaints, Fannie Mae alleged, “[I]n accordance with the terms of the [n]ote 
and [m]ortgage, [Fannie Mae] has declared the entire outstanding principal 
amount, accrued interest thereon, and all other sums due under the [n]ote and 
[m]ortgage to be presently due and payable.”   
[¶9]  After an unsuccessful mediation session held in the summer of 
2014, the Deschaines filed an answer that denied many of the allegations in 
the amended complaint and asserted, among others, the affirmative defenses 
of lack of standing and res judicata.  The Deschaines’ responsive pleading 
included counterclaims to quiet title and for a declaratory judgment that, as a 
result of the dismissal with prejudice of Fannie Mae’s prior foreclosure 
complaint, Fannie Mae was no longer entitled to enforce the mortgage and so 
the Deschaines held title to the property unencumbered by the mortgage in 
favor of Fannie Mae.  
                                         
3  The amended complaint named 21st Mortgage Corporation as a party-in-interest because it 
allegedly holds a junior interest in the mortgaged property.  See 14 M.R.S. § 6321 (2013), amended 
by P.L. 2013, ch. 555, § 2 (effective Aug. 1, 2014); P.L. 2015, ch. 229, § 1 (effective October 15, 2015).  
That entity did not participate in either the trial court proceedings or this appeal.   
 
7 
[¶10]  In January 2015, Fannie Mae obtained an assignment of the 
mortgage from the successor-in-interest to First Horizon, the original lender, 
and thus acquired standing to pursue this second foreclosure action against 
the Deschaines, which had already been pending for over a year.  See 
Greenleaf, 2014 ME 89, ¶ 17, 96 A.3d 700.   
 
[¶11]  In November 2015, the Deschaines moved for summary 
judgment on their counterclaims and on all counts of Fannie Mae’s complaint.  
See M.R. Civ. P. 56.  With the motion, the Deschaines filed a statement of 
material facts, see M.R. Civ. P. 56(h)(1), in which they asserted that the notice 
of default issued by Fannie Mae in September 2011 “resulted in the 
acceleration of the mortgage debt.”  In support of this assertion, the 
Deschaines cited to the 2011 foreclosure complaint as one of several record 
references.  See M.R. Civ. P. 56(h)(4).  Based on that assertion and our decision 
in Johnson, the Deschaines argued that Fannie Mae was barred from bringing a 
second foreclosure claim and that they were therefore entitled to a judgment 
as a matter of law on that claim and on their counterclaims.  
 
[¶12]  In its opposition to the Deschaines’ motion, Fannie Mae disputed 
the assertion that the debt was accelerated in the 2011 action, characterizing 
it as a legal conclusion that did not require a response.  Fannie Mae 
 
8 
simultaneously filed its own motion for summary judgment on each count of 
its complaint.  In its statement of material facts, Fannie Mae reiterated 
allegations it had made in its complaint, including the Deschaines’ failure, 
since February 2011, to make principal and interest payments due pursuant 
to the note, among other grounds for default.  Fannie Mae argued that it was 
not precluded from bringing a second foreclosure claim against the 
Deschaines because the 2013 action was based on new breaches of the note 
and mortgage that had not been at issue in the earlier proceeding and because 
there had not been an effective acceleration of the debt in that proceeding.   
 
[¶13]  In June 2016, the court (Anderson, J.) granted the Deschaines’ 
motion for summary judgment on both Fannie Mae’s complaint and their 
counterclaims, and denied Fannie Mae’s cross-motion for summary judgment.  
The court concluded, as a matter of law, that each of Fannie Mae’s claims was 
barred by res judicata, and alternatively that in the circumstances of this case 
Fannie Mae was not entitled to relief on its equitable claims.  As to the 
counterclaims, the court concluded that the Deschaines were not subject to 
any remaining obligation created by the note and mortgage because Fannie 
Mae was “barred from enforcing the note,” and the Deschaines were therefore 
entitled to a declaratory judgment that they held title to the Lincoln property 
 
9 
unencumbered by the mortgage in favor of Fannie Mae.  See 14 M.R.S. § 6206 
(2016) (“If it appears that nothing is due on the mortgage, judgment shall be 
rendered for the defendant and for his costs, and he shall hold the land 
discharged of the mortgage.”).  Fannie Mae timely appealed.  See 14 M.R.S. 
§ 1851 (2016); M.R. App. P. 2(b)(3). 
II.  DISCUSSION 
 
[¶14]  Fannie Mae argues that the court erred by concluding, as a matter 
of law, that the present foreclosure action is barred by the doctrine of res 
judicata.4  “We review a grant of a summary judgment on a res judicata issue 
de novo, viewing the record in the light most favorable to the party against 
whom judgment has been granted to decide whether the parties’ statements 
of material facts and the referenced record material reveal a genuine issue of 
material fact.”  Wilmington Tr. Co. v. Sullivan-Thorne, 2013 ME 94, ¶ 6, 81 A.3d 
371 (quotation marks omitted). 
                                         
4  In its summary of the issues on appeal, Fannie Mae also states as an issue that the court erred 
by concluding that its claims to enforce an equitable mortgage and for unjust enrichment were 
precluded as a matter of law.  Because Fannie Mae fails to develop that issue in its brief, we do not 
address it.  See Bayview Loan Servicing v. Bartlett, LLC, 2014 ME 37, ¶ 15 n.5, 87 A.3d 741 (stating 
that a party waives any argument that it fails to adequately develop in briefing).  Fannie Mae does 
not argue that the court erred by denying its cross-motion for summary judgment on its foreclosure 
claim.  Rather, Fannie Mae argues that it should “be allowed to proceed on its foreclosure claim”—in 
other words, it argues the court did not err by denying its summary judgment motion, which, if 
granted, would have precluded a trial.  (Emphasis added.)  Our discussion is therefore limited to 
whether the court erred by granting the Deschaines’ motion for summary judgment on Fannie 
Mae’s foreclosure complaint and on their counterclaims.  See Thurston v. Galvin, 2014 ME 76, ¶ 5 
n.1, 94 A.3d 16 (stating that an issue not raised on appeal is deemed waived).  
 
10 
[¶15]  The doctrine of res judicata prevents “a party and its privies 
. . . from relitigating claims or issues that have already been decided.”  
Portland Co. v. City of Portland, 2009 ME 98, ¶ 22, 979 A.2d 1279.  The 
doctrine “has two components: collateral estoppel, also known as issue 
preclusion, and claim preclusion.”  Wilmington Tr. Co., 2013 ME 94, ¶ 7, 
81 A.3d 371 (quotation marks omitted).  Claim preclusion, which is the 
component at issue in this case, “bars the relitigation of claims if: (1) the same 
parties or their privies are involved in both actions; (2) a valid final judgment 
was entered in the prior action; and (3) the matters presented for decision in 
the second action were, or might have been, litigated in the first action.”5  Id. 
(quotation marks omitted).   
[¶16]  Fannie Mae does not dispute that the same parties were involved 
in both the 2011 and 2013 foreclosure actions.  
[¶17]  Additionally, as Fannie Mae acknowledged at oral argument, 
because the dismissal with prejudice in the 2011 action was imposed as a 
sanction pursuant to Rule 16A(d) based on both parties’ failure to comply 
                                         
5  In contrast, issue preclusion “merely prevents the reopening in a second action of an issue of 
fact actually litigated and decided in an earlier case.”  Johnson v. Samson Constr. Corp., 1997 ME 220, 
¶ 6, 704 A.2d 866 (quotation marks omitted).  Because the question here is whether the 2011 
action prohibits the relitigation of an entire cause of action—namely, Fannie Mae’s claim for 
residential foreclosure—and is not limited to a single issue of fact, see id., we address only the claim 
preclusion component of res judicata.   
 
11 
with a scheduling order, that dismissal has the same effect as an adjudication 
on the merits of Fannie Mae’s foreclosure complaint regardless of whether 
Fannie Mae had standing at the time of the dismissal to pursue foreclosure.6  
See Green Tree Servicing, LLC v. Cope, 2017 ME 68, ¶¶ 17-18 & n.10, 158 A.3d 
931.  The dismissal is therefore a valid final judgment for purposes of res 
judicata.  See Penkul v. Matarazzo, 2009 ME 113, ¶ 8, 983 A.2d 375 (“For a 
valid final judgment to have preclusive effect, it must be made on the merits of 
the case.”); Johnson, 1997 ME 220, ¶¶ 3, 8, 704 A.2d 866 (concluding that a 
judgment dismissing the plaintiff’s foreclosure complaint with prejudice 
based on its failure to timely file a report of conference of counsel “operated 
as an adjudication on the merits” (quotation marks omitted)).   
[¶18]  We therefore proceed to address the remaining element of res 
judicata, namely, whether the matters presented for decision in this 
foreclosure action were, or might have been, litigated in the 2011 foreclosure 
                                         
6  Any assertion to the contrary would have been unavailing in any event.  Fannie Mae may not 
now collaterally attack the earlier judgment of dismissal with prejudice (i.e., on the merits) based 
on its alleged lack of standing in the 2011 action in an attempt to render that judgment void or limit 
its preclusive effect, because Fannie Mae failed to raise the standing issue during those earlier trial 
court proceedings or through a timely appeal from the dismissal.  Cf. Wells Fargo Bank v. White, 
2015 ME 145, ¶¶ 10-13, 127 A.3d 538 (holding that the court did not err or abuse its discretion by 
denying a plaintiff’s M.R. Civ. P. 60(b)(4) request for relief from a judgment of foreclosure based on 
the plaintiff’s contention that the judgment was void for want of standing, because the plaintiff had 
the opportunity to raise the standing issue during the trial court proceedings but did not do so).   
 
12 
action.  See Wilmington Tr. Co., 2013 ME 94, ¶ 7, 81 A.3d 371.  To answer that 
question, we must determine 
whether the same cause of action was before the court in the prior 
case.  We define a cause of action through a transactional test, 
which examines the aggregate of connected operative facts that 
can be handled together conveniently for purposes of trial to 
determine if they were founded upon the same transaction, arose 
out of the same nucleus of operative facts, and sought redress for 
essentially the same basic wrong. . . . Claim preclusion may apply 
even where a suit relies on a legal theory not advanced in the first 
case, seeks different relief than that sought in the first case, or 
involves evidence different from the evidence relevant to the first 
case. 
 
Id. ¶ 8 (citations, alterations, and quotation marks omitted). 
[¶19]  Claim preclusion “is grounded on concerns for judicial economy 
and efficiency, the stability of final judgments, and fairness to litigants.”  Id. 
¶ 6.  The doctrine promotes those goals by preventing a party “from 
splintering his or her claim and pursuing it in a piecemeal fashion by asserting 
in a subsequent lawsuit other grounds of recovery for the same claim that the 
litigant had a reasonable opportunity to argue in the prior action.”  Johnson, 
1997 ME 220, ¶ 7, 704 A.2d 866 (quotation marks omitted). 
[¶20]  We previously addressed claim preclusion in the foreclosure 
context in Johnson.  In that case, the mortgagee commenced a foreclosure 
action in August 1990 alleging that the mortgagor had defaulted by failing to 
 
13 
make the periodic payment due on the note in May 1990; that the mortgagor 
failed to timely cure the default; and that therefore, pursuant to the 
acceleration clause in the note, the mortgagee was entitled to a judgment for 
the entire unpaid principal balance.  Id. ¶¶ 2-3.  Four years later, the court 
dismissed the foreclosure action with prejudice after the mortgagee failed to 
timely file a court-ordered report of conference of counsel.  Id. ¶ 3.  The 
mortgagee then filed a second foreclosure complaint in August 1995, this time 
alleging that the mortgagor had failed to make any payments due on the note 
since September 1990 and again seeking a judgment for the entire unpaid 
principal balance.  Id. ¶ 4.  Rejecting the mortgagee’s argument that the first 
judgment should only bar claims based on defaults that occurred before the 
first action was filed, the trial court granted the mortgagor’s motion for 
summary judgment based on res judicata.  Id. 
[¶21]  We affirmed the court’s decision on appeal.  Id. ¶¶ 1, 8.  We 
reasoned that once the mortgagor “triggered the acceleration clause of the 
note” by “demand[ing] payment of the entire unpaid principal balance,” the 
installment contract, which “required 240 equal monthly payments of 
principal and interest[,] . . . became indivisible.  The obligations to pay each 
installment merged into one obligation to pay the entire balance on the note.”  
 
14 
Id. ¶ 8.  Accordingly, we concluded, as a matter of law, that the judgment 
dismissing the first foreclosure complaint with prejudice barred the second 
foreclosure complaint, “which allege[d] precisely what the complaint in the 
first action alleged: that [the mortgagor] defaulted on the note and that [the 
mortgagee was] entitled to a judgment for the amount due under the note.”  
Id.  We stated that the mortgagee could not “avoid the consequences of his 
procedural default . . . by attempting to divide a contract which became 
indivisible when he accelerated the debt in the first lawsuit.”  Id. 
[¶22]  Johnson fully disposes of the issue in this case.  The Deschaines’ 
promissory note requires 360 equal monthly payments of principal and 
interest.  Paragraph 7(C) of the note states, however, that if the borrower fails 
to “pay the full amount of each monthly payment on the date it is due . . . the 
[n]ote [h]older may send [the borrower] a written notice telling [the 
borrower] that if [she] do[es] not pay the overdue amount by a certain date, 
the [n]ote [h]older may require [the borrower] to pay immediately the full 
amount of [p]rincipal that has not been paid and all the interest that [the 
borrower] owe[s] on that amount.”  An acceleration clause at Paragraph 22 of 
the mortgage states that if the borrower “fail[s] to keep any promise or 
agreement made in this [s]ecurity [i]nstrument, including the promises to pay 
 
15 
when due the [s]ums [s]ecured,” and fails to timely cure the default after being 
notified of it, then the “[l]ender may require that [the borrower] pay 
immediately the entire amount then remaining unpaid under the [n]ote and 
under this [s]ecurity [i]nstrument . . . without making any further demand for 
payment.”  Paragraph 22 further provides, “If [l]ender requires immediate 
payment in full, [l]ender may bring a lawsuit to take away all of [the 
borrower’s] remaining rights in the [p]roperty and have the [p]roperty sold.”   
[¶23]  It is undisputed that in September 2011 Fannie Mae sent the 
Deschaines a notice of default informing them that they had failed to make 
monthly payments on the note since January 2011, and stating that if the 
Deschaines failed to cure the default “within 35 days of receipt of this notice, 
the balance of the [n]ote may be deemed accelerated without further demand, 
and the [l]ender may proceed with foreclosure of the [m]ortgage.”  It is also 
undisputed that the Deschaines failed to timely cure the default.  Accordingly, 
the necessary predicates for acceleration as specified in Paragraph 7(C) of the 
note and Paragraph 22 of the mortgage—namely, a default, a subsequent 
notice of default, and a failure to cure the default—were fulfilled.  Then, in 
December 2011, Fannie Mae filed a foreclosure complaint alleging that “in 
accordance with the terms of the [l]oan [d]ocuments, [Fannie Mae] has 
 
16 
declared the entire outstanding principal amount, accrued interest thereon, 
and all other sums due under the [l]oan [d]ocuments to be presently due and 
payable.”7  (Emphasis added.)  If Fannie Mae in fact accelerated the debt in the 
2011 action—as it had alleged—then this case would be indistinguishable 
from Johnson because Fannie Mae would have placed the entire outstanding 
balance on the note at issue in the first case, precluding any future separate 
action to recover the same debt.  
[¶24]  In an attempt to avoid the effects of Johnson, Fannie Mae makes 
several arguments to support its contention that the record does not 
conclusively establish that acceleration occurred in the 2011 action.   
[¶25]  First, Fannie Mae contends that the acceleration provisions in the 
note and mortgage, which state that the lender “may” require immediate 
payment in full upon the borrower’s failure to cure a default, merely give the 
lender the option to accelerate the debt and that Fannie Mae did not 
indisputably exercise that option.  In contrast, the note in Johnson stated in 
mandatory terms that upon a borrower’s failure to cure a default “the entire 
unpaid principal and accrued interest shall become immediately due and 
                                         
7  We note that according to its own complaint, filed in December 2011, Fannie Mae alleged that 
the principal balance alone that was due from the Deschaines exceeded $122,000, in contrast to the 
$7,719.33 required to cure the default as stated in the notice of default issued by Fannie Mae only 
one month earlier.   
 
17 
payable without further demand.”  Johnson, 1997 ME 220, ¶¶ 2, 8, 704 A.2d 
866 (emphasis added) (quotation marks omitted). 
[¶26]  In the circumstances of this case, however, the permissive 
acceleration language in the Deschaines’ note and mortgage does not make 
Johnson distinguishable because, as shown in the summary judgment record, 
Fannie Mae exercised its optional right to accelerate the entire obligation.  
When, as here, a note contains an optional acceleration clause, some 
affirmative action is required by the note holder to provide notice to the 
borrower that the holder has exercised that option.  See, e.g., Hassler v. 
Account Brokers of Larimer Cty., Inc., 274 P.3d 547, 553-54 (Colo. 2012); Reano 
v. U.S. Bank, Nat’l Ass’n, 191 So. 3d 959, 961 (Fla. Dist. Ct. App. 2016); Bischoff 
v. Cook, 185 P.3d 902, 911 n.8 (Haw. Ct. App. 2008); First Fed. Sav. & Loan Ass’n 
of Gary v. Stone, 467 N.E.2d 1226, 1232 (Ind. Ct. App. 1984).  The filing of a 
foreclosure complaint “constitutes a valid exercise of a mortgagee’s 
acceleration right” and is sufficient to provide notice to the mortgagor.  
Hartford Fed. Sav. & Loan Ass’n v. Tucker, 491 A.2d 1084, 1086 (Conn. 1985); 
see also FAS Capital, LLC v. Carr, 7 F. Supp. 3d 1259, 1270 (N.D. Ga. 2014); 
Reano, 191 So. 3d at 961; Bischoff, 185 P.3d at 911 n.8; C.T. Drechsler, 
Annotation, What is Essential to Exercise of Option to Accelerate Maturity of Bill 
 
18 
or Note, 5 A.L.R.2d 968 § 5[a] (1949) (“The institution of a suit for the whole 
debt is, of course, the most solemn form in which the holder can exercise his 
option.  This is well recognized and it is, hence, generally held that the 
institution of a suit on the bills or notes is notice of the most unequivocal 
character that the holder wishes to avail himself of his option for 
acceleration.”). 
[¶27]  Here, in its 2011 complaint for foreclosure, Fannie Mae alleged—
subject to the requirements of M.R. Civ. P. 11(a)—that it had declared the 
entire unpaid principal balance to be due immediately.  Accordingly, Fannie 
Mae’s own complaint in the 2011 proceeding establishes that it exercised its 
right to accelerate the underlying debt on the note, and it may not now argue 
otherwise.8 
[¶28]  Fannie Mae next argues that under the parties’ mortgage contract 
an attempted acceleration is not effective unless and until the court enters a 
                                         
8  This case is therefore distinguishable from Wilmington Trust Co. v. Sullivan-Thorne, where we 
concluded that the summary judgment record did not establish that the mortgagee had accelerated 
a promissory note in previous litigation between the parties.  2013 ME 94, ¶ 12 n.4, 81 A.3d 371.  In 
the first action, the mortgagee merely sent the mortgagor a notice stating that it would accelerate 
the debt if the mortgagee failed to cure the default, but did not actually commence a foreclosure 
proceeding carrying out that threatened action.  See id. ¶¶ 3-4, 12 n.4.  Rather, the mortgagee, which 
the mortgagor brought in as a third-party defendant, filed a counterclaim against the mortgagor, 
but the counterclaim did not clearly place the full unpaid principal balance at issue and also was not 
a claim for foreclosure.  See id. ¶¶ 4, 11-12.  We stated that Johnson did not bar the mortgagee from 
bringing the later foreclosure action because the underlying debt had not been accelerated.  Id. ¶ 12 
n.4.     
 
19 
foreclosure judgment, because until that time the mortgagor has the right 
under Paragraph 19 to “discontinue[]” enforcement of the mortgage.  The 
mortgagor may do so by paying the mortgagee “the full amount that then 
would be due under [the mortgage] and the [n]ote as if immediate payment in 
full had never been required,” thereby reinstating the parties’ prior 
contractual relationship with the same continuing obligation on the part of the 
mortgagor to make installment payments.  In Fannie Mae’s view, acceleration 
occurs only if the borrower fails to take certain actions to stop foreclosure, 
thereby putting the onus on the borrower to elect whether acceleration by the 
lender occurs.   
[¶29]  Fannie Mae’s argument misconstrues the nature of its right to 
accelerate.  Pursuant to Paragraph 7(C) of the note and Paragraph 22 of the 
mortgage, acceleration is the lender’s unilateral right, upon stated conditions, 
to require “immediate payment in full” of the amount then remaining unpaid 
under the loan documents “without making any further demand for payment.”  
The loan documents therefore establish that acceleration was not dependent 
on the Deschaines’ failure exercise their rights under Paragraph 19 of the 
mortgage.  Rather, as we have discussed, see supra ¶¶ 26-27, the acceleration 
occurred here no later than when Fannie Mae commenced the first 
 
20 
foreclosure action and declared in its complaint that the entire amount the 
Deschaines were obligated to pay pursuant to the loan documents was then 
due.  Further, it is undisputed that in the 2011 action the Deschaines did not 
take the actions required by Paragraph 19 to discontinue Fannie Mae’s right 
to foreclose prior to entry of the dismissal with prejudice.  Accordingly, even 
assuming a borrower’s invocation of the right to reinstate renders 
acceleration ineffective, that did not occur in this case.   
[¶30]  Finally, relying on case law from other jurisdictions, see, e.g., 
Singleton v. Greymar Assocs., 882 So. 2d 1004, 1006-08 (Fla. 2004); Cenlar FSB 
v. Malenfant, 151 A.3d 778, 785-92 (Vt. 2016), Fannie Mae urges us to 
abandon our holding in Johnson, arguing that we misunderstood the effect of a 
dismissal with prejudice on subsequent foreclosure actions.  Specifically, 
Fannie Mae argues that if the dismissal with prejudice in the 2011 action 
operates as an adjudication on the merits, see supra ¶ 17, then it was 
necessarily an adjudication in favor of the Deschaines, which requires us to 
treat the judgment of dismissal as if the court had determined that Fannie Mae 
failed to prove the elements of foreclosure, including default.  See Greenleaf, 
2014 ME 89, ¶ 18, 96 A.3d 700 (listing the elements of proof to obtain a 
foreclosure judgment).  Fannie Mae goes on to argue that under the loan 
 
21 
documents a default is a condition precedent to acceleration, and so contrary 
to our holding in Johnson, which also involved a note where acceleration arose 
from a default, 1997 ME 220, ¶¶ 3, 8, 704 A.2d 866, the effect of the dismissal 
with prejudice was to invalidate the attempted acceleration because in effect 
the court determined that the Deschaines were not in default.  See Cenlar FSB, 
151 A.3d at 787-88.  Fannie Mae argues that absent a prior adjudication of 
default or an effective acceleration, it remains free to file a new claim for 
foreclosure based on defaults that have allegedly occurred since the dismissal 
was entered, because those new grounds for foreclosure could not have been 
litigated in the 2011 action.    
 
[¶31]  We are not persuaded by Fannie Mae’s challenges to Johnson’s 
continuing vitality.  In a statement of material fact, Fannie Mae itself 
asserted—and the Deschaines admitted—that the Deschaines “failed to cure 
the default” that was the basis for the 2011 action.  To the extent that Fannie 
Mae now argues that the dismissal with prejudice means that the Deschaines 
were not, in fact, in default, thereby rendering acceleration ineffective, its 
argument does not carry the day.  Although the dismissal with prejudice in the 
2011 action operates as an adjudication on the merits for purposes of res 
judicata, see Johnson, 1997 ME 220, ¶¶ 3, 8, 704 A.2d 866, that dismissal was 
 
22 
not actually an adjudication in favor of the Deschaines, but rather resulted 
from both parties’ failure to comply with a scheduling order, see Cope, 
2017 ME 68, ¶ 18, 158 A.3d 931 (“A dismissal with prejudice imposed as a 
sanction is not an adjudication of the merits of a plaintiff's claim.  Rather, the 
imposition of a sanction represents the court’s determination of a collateral 
issue: whether the party or attorney has abused the judicial process.” 
(alteration and quotation marks omitted)).  The dismissal with prejudice 
therefore does not undermine the undisputed facts in the summary judgment 
record demonstrating that, as we have concluded, see supra ¶ 23, the 
conditions precedent to acceleration—including default—were satisfied in the 
2011 action.  Further, because acceleration is entirely the lender’s prerogative 
and occurs upon the filing of a foreclosure complaint, see supra ¶¶ 26-27, it 
does not depend on any judicial imprimatur in the form of a judgment in the 
lender’s favor. 
 
[¶32]  Fannie Mae also contends that adherence to Johnson will result in 
a windfall to the Deschaines—namely a “free,” or deeply discounted, house—
and that this consequence is disproportionate to the bank’s procedural default 
in the 2011 action.  
 
23 
[¶33]  We disagree.  To the contrary, abandoning our analysis in Johnson 
would result in a windfall to Fannie Mae and all other similarly situated 
mortgagees because those parties would become entitled to commence 
successive foreclosure actions indefinitely until they eventually win.  In other 
words, mortgagees would be treated differently from all or most other 
litigants in other types of cases.  We have held that a judgment entered for the 
defendant based on a procedural aspect of the case, such as the statute of 
limitations or some other grounds unrelated to the substance of the claim, 
bars another effort by the plaintiff to obtain the same relief from the same 
defendant.  See Hebron Acad., Inc. v. Town of Hebron, 2013 ME 15, ¶¶ 29-30, 
60 A.3d 774 (concluding that a municipal decision denying a tax abatement 
request based on the applicant’s failure to meet a statute of limitations “was a 
decision on the merits for res judicata purposes” and barred a future 
declaratory judgment action concerning the tax status of the property); 
Spickler v. Dube, 644 A.2d 465, 467-68 (Me. 1994) (concluding that an 
involuntary dismissal for want of prosecution of a shareholders’ derivative 
suit “serve[d] as a valid final judgment for the purposes of res judicata” and 
barred relitigation of the same cause of action).  The salutary purposes 
supporting the doctrine of claim preclusion—to promote judicial economy, 
 
24 
and to conserve the resources of the courts and litigants by protecting them 
from sequential, piecemeal litigation, see Wilmington Tr. Co., 2013 ME 94, ¶ 6, 
81 A.3d 371—are as relevant and important in foreclosure litigation as in 
other areas of the law.  We find no persuasive justification for carving out an 
exception to the settled doctrine of claim preclusion that would protect 
mortgagees from the adverse consequences of judgments dismissing their 
complaints with prejudice, particularly when unsuccessful litigants in all other 
categories of civil litigation would continue to be barred from relitigating their 
claims.9   
[¶34]  Further, our recent decisions contain multiple examples of 
proceedings—not at all unlike the case at bar—where mortgagees have failed 
to abide by court orders and established rules of court procedure, resulting in 
dismissals of their complaints.  See, e.g., United States Bank v. Sawyer, 2014 ME 
81, ¶¶ 12-13, 17, 95 A.3d 608; Bayview Loan Servicing v. Bartlett, 2014 ME 37, 
¶ 15-18, 22-23, 87 A.3d 741; Bank of N.Y. v. Richardson, 2011 ME 38, ¶¶ 2-6, 
                                         
9  We note that a mortgagee is not without an opportunity to avoid, where appropriate, the 
preclusive effect of the judgment that would dismiss with prejudice a foreclosure complaint as a 
sanction for the mortgagee’s misconduct.  For example, the mortgagee is entitled to notice and an 
opportunity to be heard before a court considers entering such a judgment, which should define the 
terms of the dismissal so that the scope and effect of that order will be clear to the parties, to us, 
and to courts addressing any subsequent attempt to relitigate a particular claim.  See Green Tree 
Servicing, LLC v. Cope, 2017 ME 68, ¶¶ 20-22, 158 A.3d 931.  Additionally, a mortgagee may also 
seek appellate relief from the terms of a judgment of dismissal with prejudice that it contends are 
oppressive—something Fannie Mae did not do after the court dismissed its 2011 complaint.   
 
25 
15 A.3d 756; Johnson, 1997 ME 220, ¶¶ 3, 8, 704 A.2d 866; cf. also Homeward 
Residential, Inc. v. Gregor, 2015 ME 108, ¶¶ 13-14, 21, 24, 122 A.3d 947.  If we 
were to shield mortgagees and their attorneys from the preclusive effects of 
adverse judgments arising from deficient pretrial conduct, we would 
improperly tolerate and perhaps even foster within that limited group of 
parties and counsel an inappropriately casual attitude toward the processes 
necessary for the prompt, orderly, and fair administration of justice.  See 
Cenlar FSB, 151 A.3d at 796 (Dooley, J., dissenting) (stating that the “message” 
that should be sent to mortgagees and counsel who engage in unacceptable 
litigation practices “should not be that they may file foreclosure action after 
foreclosure action until they finally win”); M. Wachspress, et al., Comment, 
In Defense of “Free Houses,” 125 Yale L.J. 1115, 116 (2016) (stating that 
application of principles of res judicata in foreclosure cases will “provide[] a 
necessary market-correcting incentive to promote greater responsibility 
among foreclosure litigators”).   
[¶35]  For these reasons, we reaffirm our analysis in Johnson as good 
and settled law, and conclude that because Fannie Mae exercised its right to 
accelerate, the promissory note became “indivisible” and the Deschaines’ 
obligation to pay each monthly installment of principal and interest over the 
 
26 
life of the note merged into a unitary obligation to pay the entire debt.  
1997 ME 220, ¶ 8, 704 A.2d 866.  Contrary to Fannie Mae’s contention, there 
could be no new breaches of the Deschaines’ obligations following 
acceleration because, once the contract became unified as a result of that 
acceleration, the Deschaines did not have any continuing responsibility to 
make monthly installment payments.10  Fannie Mae “cannot avoid the 
consequences of [its] procedural default” by alleging grounds for foreclosure 
that are different from those alleged in the 2011 action—in other words, by 
“attempting to divide a contract which became indivisible when [it] 
accelerated the debt in the first lawsuit.”  Johnson, 1997 ME 220, ¶ 8, 704 A.2d 
866.   
[¶36]  Consequently, the matters presented for decision in the present 
foreclosure action were or might have been litigated in the 2011 action 
because in each case Fannie Mae sought “redress for the same basic wrong,” 
see Wilmington Tr. Co., 2013 ME 94, ¶¶ 7-8, 81 A.3d 371, and—as explicitly 
stated in both its 2011 and 2013 complaints—requested precisely the same 
form of relief: a judgment of foreclosure for “the entire outstanding principal 
                                         
10  In Wilmington, we concluded that a second action on the same note and mortgage was not 
precluded, in part because the mortgagor sought to recover for breaches that were not at issue in a 
prior action.  2013 ME 94, ¶ 12, 81 A.3d 371.  There, however, the mortgagor had not accelerated 
the debt in the prior action, see supra n.8, and so the contract had not become unified.   
 
27 
amount, accrued interest thereon, and all other sums due under the [l]oan 
[d]ocuments.”  The third element of res judicata is therefore satisfied. 
III.  CONCLUSION 
[¶37]  In sum, based on the application of the principles articulated in 
Johnson to the undisputed facts of this case, Fannie Mae’s 2013 foreclosure 
complaint is barred by the judgment dismissing with prejudice its 
2011 complaint.  The court therefore did not err by granting the Deschaines’ 
motion for summary judgment on Fannie Mae’s foreclosure complaint.  
Additionally, because Fannie Mae is precluded from seeking to recover the 
underlying debt on the note, the court did not err by concluding, based on 
14 M.R.S. § 6206, that the Deschaines were, as a matter of law, entitled to a 
judgment declaring that they hold title to the Lincoln property unencumbered 
by the mortgage in favor of Fannie Mae.   
The entry is: 
Judgment affirmed.  
 
 
 
 
 
 
 
 
 
Jeffrey J. Hardiman, Esq., and Dean J. Wagner, Esq., Shechtman Halperin 
Savage, LLP, Pawtucket, Rhode Island, and Marissa I. Delinks, Esq. (orally), 
Hinshaw and Culbertson LLP, Boston, Massachusetts, for appellant Federal 
National Mortgage Association 
 
 
28 
 
James F. Cloutier, Esq., Cloutier, Conley & Duffett, P.A., Portland, for appellees 
Patricia W. Deschaine and Paul J. Deschaine 
 
L. Scott Gould, Esq., Cape Elizabeth, for amici curiae National Consumer Law 
Center and National Association of Consumer Advocates 
 
Jeffrey Gentes, Esq., Jerome Frank Legal Services Corporation, New Haven, 
Connecticut, for amicus curiae Jerome Frank Legal Services Corporation 
 
Thomas A. Cox, Esq. (orally), Portland, for amicus curiae Maine Attorneys 
Saving Homes 
 
Catherine R. Connors, Esq., and John J. Aromando, Esq., Pierce Atwood LLP, 
Portland, for amici curiae Maine Bankers Association and The National 
Mortgage Bankers Association 
 
Frank D’Alessandro, Esq., Pine Tree Legal Assistance, Portland, for amicus 
curiae Pine Tree Legal Assistance 
 
Gerald F. Petruccelli, Esq., amicus curiae pro se 
 
John A. Doonan, Esq., and Reneau J. Longoria, Esq., Doonan, Graves & Longoria, 
LLC, Beverly, Massachusetts, for amicus curiae Doonan, Graves & Longoria 
 
 
Penobscot County Superior Court docket number RE-2013-140 
FOR CLERK REFERENCE ONLY