Title: Bank of Am., N.A. v. Cloutier

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2013 ME 17 
Docket: 
Yor-12-361 
Argued: 
January 16, 2013 
Decided: 
February 7, 2013 
 
Panel: 
ALEXANDER, LEVY, SILVER, GORMAN, and JABAR, JJ. 
 
 
BANK OF AMERICA, N.A. 
 
v. 
 
JAMES A. CLOUTIER 
 
 
ALEXANDER, J. 
[¶1]  The Superior Court (York County, Fritzsche, J.), acting pursuant to 
M.R. App. P. 24(a), has reported a question of law to us: “What is the proof that is 
required for a party to prove ‘ownership’ of the mortgage note and mortgage for 
purposes of foreclosure, as required by the decision of the Law Court in Chase 
Home Finance, LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508?”   
[¶2]  The question arose in an action brought by Bank of America, N.A. 
against James A. Cloutier1 for foreclosure on a residential mortgage.  We accept 
the report and hold that a plaintiff in a foreclosure action must identify the owner 
or economic beneficiary of the note and provide certain other evidence as 
described in 14 M.R.S. § 6321 (2012). 
                                         
1  Mortgage Electronic Registration Systems, Inc. is a named party-in-interest. 
 
2 
I.  CASE HISTORY 
[¶3]  The parties stipulated to the following facts for purposes of addressing 
the Superior Court’s reported question. 
[¶4]  On January 27, 2006, James A. Cloutier executed a promissory note to 
American Money Centers, Inc. and a mortgage deed of property in Saco, which 
secures the note.  The mortgage deed identified Mortgage Electronic Registration 
Systems, Inc. (MERS) as the mortgagee of record.  MERS served as the nominee 
for American Money Centers and its successors and assigns.  MERS subsequently 
assigned the mortgage to BAC Home Loans Servicing, LP. 
[¶5]  The note now reflects a series of endorsements beginning with 
American Money Centers and ending in a blank endorsement.  American Money 
Centers endorsed the note to the order of Countrywide Bank, N.A., which endorsed 
it to the order of Countrywide Home Loans, Inc., which then endorsed it in blank.  
In March of 2006, the Federal Home Loan Corporation (Freddie Mac) purchased 
the note from Countywide Home Loans, which was the owner of the note at the 
time.  Freddie Mac has not sold the note nor has it transferred its beneficial interest 
in the note.  At present, Bank of America possesses the note, which still bears a 
blank endorsement.2   
                                         
2  BAC Home Loans Servicing, LP took possession of the note and then merged into Bank of America, 
N.A.  Bank of America was substituted as the plaintiff in this case after the merger. 
 
3 
[¶6]  Bank of America services Cloutier’s loan on behalf of Freddie Mac.  
Bank of America, whose actions are governed by a contract between it and Freddie 
Mac, has pursued this foreclosure action in its capacity as servicer.3 
[¶7]  Cloutier failed to make the payment due on January 1, 2010, and has 
not made any subsequent payments.  Bank of America filed a complaint for 
foreclosure in the Superior Court in August of 2010.  After mediation, Bank of 
America moved for a summary judgment.  Before acting on the motion, the court 
reported the question to us pursuant to 4 M.R.S. § 57 (2012) and M.R. App. P. 
24(a). 
II.  LEGAL ANALYSIS 
A. 
Reported Question 
[¶8]  When a trial court reports a question to us pursuant to M.R. App. P. 
24(a), we conduct an independent examination to decide if answering the question 
is consistent with our basic function as an appellate court, or would improperly 
place us in the role of an advisory board.  Baker v. Farrand, 2011 ME 91, ¶ 7, 
26 A.3d 806.  In this examination, we consider whether (1) the question reported is 
of sufficient importance and doubt to outweigh the policy against piecemeal 
                                         
3  Servicers are responsible for the day-to-day management of mortgage loans on behalf of other 
entities.  Adam J. Levitin & Tara Twomey, Mortgage Servicing, 28 Yale J. on Reg. 1, 23 (2011).  For 
example, servicers send bills, collect payments, and keep track of balances.  Id.  We do not attribute legal 
significance to the term “servicer.”  Our analysis addresses whether an entity is empowered to bring a 
foreclosure action as a “mortgagee or any person claiming under the mortgagee” pursuant to 14 M.R.S. 
§ 6321 (2012). 
 
4 
litigation; (2) the question might not have to be decided because of other possible 
dispositions; and (3) a decision on the issue would, in at least one alternative, 
dispose of the action.  Id.  Rule 24 is an exception to the final judgment rule that 
should be used sparingly.  Liberty Ins. Underwriters, Inc. v. Estate of Faulkner, 
2008 ME 149, ¶ 5, 957 A.2d 94. 
[¶9]  Applying these standards, the Superior Court determined that reporting 
this question was appropriate.  The Superior Court noted that the reported question 
has been presented to multiple trial courts with different results, which caused it to 
believe that the question was of sufficient doubt and importance to seek our 
guidance.  Further, given the plaintiff’s pending motion for summary judgment, 
and the apparent absence of disputed facts in the record, it did not appear that 
resolution of the question could be avoided through other dispositions.  Finally, the 
court stated that our answer, in at least one alternative, would finally dispose of the 
case. 
[¶10]  Our independent review of the record leads us to concur with the 
Superior Court’s conclusions.  See Baker, 2011 ME 91, ¶ 7, 26 A.3d 806.  
Accordingly, we accept the reported question.  See id. ¶ 14. 
 
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B. 
Proof of Ownership 
[¶11]  The Superior Court’s question arises from a single sentence in 
14 M.R.S. § 6321,4 the foreclosure by civil action statute: 
The mortgagee shall certify proof of ownership of the mortgage note 
and produce evidence of the mortgage note, mortgage and all 
assignments and endorsements of the mortgage note and mortgage. 
The Legislature added this sentence to the foreclosure by civil action statute as part 
of comprehensive foreclosure reform in 2009.  See P.L. 2009, ch. 402, § 17 
(effective June 15, 2009).  Section 6321, which is lengthy, is reprinted as an 
attachment following this opinion. 
[¶12]  We interpret the meaning of a statute de novo by analyzing its plain 
language in the context of the whole statutory scheme.  Fuhrmann v. Staples the 
Office Superstore E., Inc., 2012 ME 135, ¶ 23, --- A.3d ---.  If the statute’s 
meaning is unambiguous, and not illogical or absurd, that meaning controls, and 
we do not look beyond its words.  Russell v. ExpressJet Airlines, Inc., 2011 ME 
123, ¶ 16, 32 A.3d 1030.  Only when a statute’s meaning is ambiguous do we 
consider other evidence of legislative intent.  Michalowski v. Bd. of Licensure in 
Med., 2012 ME 134, ¶ 24 n.6, --- A.3d ---. 
                                         
4  The Superior Court referenced Chase Home Finance LLC v. Higgins, 2009 ME 136, ¶ 11, 985 A.2d 
508, in its question.  In Higgins, we described this section as requiring a “mortgage holder” to submit 
“properly presented proof of ownership of the mortgage note and the mortgage, including all assignments 
and endorsements of the note and the mortgage.”  Id. 
 
6 
[¶13]  The plain language at issue creates two requirements: that the 
mortgagee “certify proof of ownership of the mortgage note” and that the 
mortgagee “produce evidence” of various documents and transactions.  14 M.R.S. 
§ 6321.  Our cases citing this sentence have applied only the second requirement 
related to evidence of ownership.  In Wells Fargo Bank, NA v. deBree, we vacated 
a summary judgment in favor of a bank when the bank “failed to supply evidence 
that it owns the deBrees’ note and mortgage.”  2012 ME 34, ¶¶ 7-11, 38 A.3d 
1257.  Similarly, in HSBC Bank USA, N.A. v. Gabay, we vacated a summary 
judgment when the plaintiff failed to cite evidence satisfying the requirement in its 
statement of material facts.  2011 ME 101, ¶¶ 1, 12-18, 28 A.3d 1158.  In addition, 
we acknowledged, but did not apply, this sentence in Mortgage Electronic 
Registration Systems, Inc. v. Saunders, 2010 ME 79, ¶ 12 n.4, 2 A.3d 289. 
[¶14]  The requirement in section 6321, paragraph 3 that a plaintiff “certify 
proof of ownership of the mortgage note” is the basis for Cloutier’s contention that 
only the economic beneficiary of a mortgage note may sue for foreclosure.  
Cloutier argues that only an “owner” and not a “holder” or other entity entitled to 
enforce the note may bring a foreclosure action.  Title 11 M.R.S. § 3-1301 (2012) 
 
7 
lists who is entitled to enforce an instrument pursuant to Article 3-A of Maine’s 
version of the Uniform Commercial Code (UCC)).5 
[¶15]  Additionally, the first sentence in section 6321 clarifies that it is 
consistent with section 3-1301 of the UCC.  It provides: “After breach of condition 
in a mortgage of first priority, the mortgagee or any person claiming under the 
mortgagee may proceed for the purpose of foreclosure . . . .”  14 M.R.S. § 6321 
(emphasis added).  This sentence, in the first paragraph, suggests that the “certify 
proof of ownership of the mortgage note” requirement, in the third paragraph, does 
not impose a standing requirement, because standing to bring a foreclosure action 
has been addressed in the first paragraph.  The “proof of ownership” language 
appears in the middle of a long paragraph concerning procedural requirements and 
adjoins another phrase concerning evidentiary requirements.  As between the first 
                                         
5  Title 11 M.R.S. § 3-1301 (2012) provides: 
“Person entitled to enforce” an instrument means: 
(1).  The holder of the instrument; 
(2).  A nonholder in possession of the instrument who has the rights of a holder; or 
(3).  A person not in possession of the instrument who is entitled to enforce the 
instrument pursuant to section 3-1309 or 3-1418, subsection (4). 
A person may be a person entitled to enforce the instrument even though the person is 
not the owner of the instrument or is in wrongful possession of the instrument. 
An “instrument” can include a “note.”  See 11 M.R.S. § 3-1104(5) (2012). 
 
8 
and third paragraphs, the first controls standing and the third addresses procedural 
prerequisites that an entity with standing must satisfy to maintain an action. 
[¶16]  The requirement that a plaintiff “certify proof of ownership of the 
mortgage note” does require that a plaintiff do more than provide the evidence 
described in the second half of the sentence.  14 M.R.S. § 6321.  The statute does 
not define “ownership.”  In this context, we interpret “certify proof of ownership” 
to require the plaintiff to identify the owner or economic beneficiary of the note 
and, if the plaintiff is not the owner, to indicate the basis for the plaintiff’s 
authority to enforce the note pursuant to Article 3-A of the UCC.  See 11 M.R.S. 
§ 3-1301.  We have previously connected a party’s right to bring an action for 
foreclosure to its right to enforce pursuant to 11 M.R.S. § 3-1301.  See Saunders, 
2010 ME 79, ¶ 12, 2 A.3d 289; see also JPMorgan Chase Bank v. Harp, 2011 ME 
5, ¶ 9 n.3, 10 A.3d 718. 
[¶17]  Cloutier argues that although Article 3-A controls the right to enforce 
a promissory note, section 6321 further limits Article 3-A.  If we could not 
harmonize section 6321 and Article 3-A, section 6321 would govern because it 
deals specifically with the subject of foreclosure.  Michalowski, 2012 ME 134, 
¶ 12, --- A.3d ---.  The two statutes can be read in harmony, however, because, as 
discussed above, paragraph three of section 6321 does not impose a standing 
 
9 
requirement.  In contrast, paragraph one of section 6321 can be read consistently 
with Article 3-A to specifically define who may enforce a promissory note. 
[¶18]  The parties do not dispute that Bank of America is a holder entitled to 
enforce the note.  Bank of America currently has possession of the note, which is 
endorsed in blank.  The definition of “holder” includes “[t]he person in possession 
of a negotiable instrument that is payable . . . to bearer.”  11 M.R.S. 
§ 1-1201(21)(a) (2012).  A holder of an instrument is entitled to enforce it.  
11 M.R.S. § 3-1301(1).  The statute expressly notes, “A person may be a person 
entitled to enforce the instrument even though the person is not the owner of the 
instrument . . . .”  Id. § 3-1301. 
[¶19]  Although the plain language of the statute unambiguously produces 
this result, we are mindful of the legislative history of this provision.  It is apparent 
from the committee file that one of the problems brought to the Legislature’s 
attention as it drafted the bill was the inability of some foreclosure defendants to 
make contact with an entity with authority to settle the case when the plaintiff is 
merely a servicer working on behalf of another entity.  Nevertheless, it does not 
appear that the specific provision at issue in this case was aimed at remedying that 
problem. 
[¶20]  Some scholarly literature describes how the use of loan servicers 
increased the difficulty for mortgagors in distress at the time the Legislature 
 
10 
enacted its amendments.  See Kathleen C. Engel & Patricia A. McCoy, The 
Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps 84-85 
(2011).  For example, complicated financial incentives may have pressured 
servicers to avoid loan modifications and push for foreclosure.6  See id. at 130-32.  
Servicers sometimes did not have the skill to negotiate modification terms or the 
infrastructure to handle the volume of foreclosures.  Id. at 130-31.  These problems 
may have motivated the Legislature when it sought to improve the ability of 
foreclosure defendants to directly communicate with an entity with authority to 
negotiate a settlement. 
[¶21]  However, the plain language of the clause requiring the mortgagee to 
“certify proof of ownership of the mortgage note” does not link these policy goals 
to a rule that only the economic beneficiary of a mortgage note may sue for 
foreclosure.  See 14 M.R.S. § 6321.  Those goals can be satisfied if the owner or 
economic beneficiary of the note is identified.  The plain language of the statute 
best supports the conclusion that the phrase “certify proof of ownership of the 
mortgage note” requires only that a foreclosure plaintiff identify the owner or 
                                         
6  The amici briefs extensively discuss these abuses and debate whether or not Freddie Mac’s servicers 
have appropriate incentives to avoid foreclosures.  We appreciate the contributions of the amici curiae, 
but these arguments are largely irrelevant to the narrow question of statutory interpretation before us.  
Even if we concluded that that statutory language was ambiguous, we would only consider the statute’s 
underlying policy to the extent that the policy illuminated the Legislature’s intent.  See Fuhrmann v. 
Staples the Office Superstore E., Inc., 2012 ME 135, ¶ 31, --- A.3d. ---.  Thus, the only alleged abuses that 
could be relevant to our analysis are those that occurred in the industry generally and when the statute was 
enacted, not within Freddie Mac specifically or when the statute is being applied. 
 
11 
economic beneficiary and, if it is not itself the owner, prove that it has power to 
enforce the note.  See id.  This unambiguous meaning, which is not illogical or 
absurd, controls, and we do not look beyond the statute’s words.  See ExpressJet 
Airlines, Inc., 2011 ME 123, ¶ 16, 32 A.3d 1030. 
 
The entry is: 
Report 
accepted. 
 
Remanded 
for 
further 
proceedings consistent with this opinion. 
 
 
 
 
 
 
 
On the briefs: 
 
Elizabeth Papez, Esq., Winston & Strawn LLP, Washington, District of 
Columbia; and Corin R. Swift, Esq., and Jeff Goldman, Esq., Bingham 
McCutchen LLP, Portland, for Bank of America, N.A. 
 
L. Scott Gould, Esq., Cape Elizabeth; Thomas A. Cox, Esq., Portland; and 
Andrea Bopp Stark, Esq., Molleur Law Office, Biddeford, for James A. 
Cloutier 
 
Catherine R. Connors, Esq., John A. Aromando, Esq., and Michelle Bush, Esq., 
Pierce Atwood LLP, Portland, for amicus curiae Federal Home Loan Mortgage 
Corporation 
 
Peter L. Murray, Esq., Murray, Plumb & Murray, Portland, for amici curiae 
Legal Services Center of Harvard Law School and National Consumer Law 
Center 
 
At oral argument: 
 
Elizabeth Papez, Esq., for Bank of America, N.A. 
 
Thomas A. Cox, Esq., for James A. Cloutier 
 
York County Superior Court docket number RE-2010-196 
FOR CLERK REFERENCE ONLY 
 
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ATTACHMENT 
Title 14 M.R.S. § 6321 (2012) (emphasis added) provides: 
Commencement of foreclosure by civil action 
After breach of condition in a mortgage of first priority, the 
mortgagee or any person claiming under the mortgagee may proceed 
for the purpose of foreclosure by a civil action against all parties in 
interest in either the Superior Court or the District Court in the 
division in which the mortgaged premises or any part of the 
mortgaged premises is located, regardless of the amount of the 
mortgage claim. 
After breach of condition of any mortgage other than one of the 
first priority, the mortgagee or any person claiming under the 
mortgagee may proceed for the purpose of foreclosure by a civil 
action against all parties in interest, except for parties in interest 
having a superior priority to the foreclosing mortgagee, in either the 
Superior Court or the District Court in the division in which the 
mortgaged premises or any part of the mortgaged premises is located.  
Parties in interest having a superior priority may not be joined nor will 
their interests be affected by the proceedings, but the resulting sale 
under section 6323 is of the defendant or mortgagor’s equity of 
redemption only.  The plaintiff shall notify the priority parties in 
interest of the action by sending a copy of the complaint to the parties 
in interest by certified mail. 
The foreclosure must be commenced in accordance with the 
Maine Rules of Civil Procedure, and the mortgagee shall 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 and such a recording thereafter constitutes record notice of 
commencement of foreclosure.  The mortgagee shall further certify 
and provide evidence that all steps mandated by law to provide notice 
to the mortgagor pursuant to section 6111 were strictly performed.  
The mortgagee shall certify proof of ownership of the mortgage note 
and produce evidence of the mortgage note, mortgage and all 
assignments and endorsements of the mortgage note and mortgage.  
 
13 
The complaint must allege with specificity the plaintiff’s claim by 
mortgage on such real estate, 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, state the book and page number of the mortgage, if any, 
state the existence of public utility easements, if any, that were 
recorded subsequent to the mortgage and prior to the commencement 
of the foreclosure proceeding and without mortgagee consent, state 
the amount due on the mortgage, state the condition broken and by 
reason of such breach demand a foreclosure and sale.  If a clerk’s 
certificate of the filing of the complaint is presented for recording 
pursuant to this section, the clerk’s certificate must bear the title 
“Clerk’s Certificate of Foreclosure” and prominently state, 
immediately after the title, the street address of the mortgaged 
premises, if any, and the book and page number of the mortgage, if 
any.  Service of process on all parties in interest and all proceedings 
must be in accordance with the Maine Rules of Civil Procedure.  
“Parties in interest” includes mortgagors, holders of fee interest, 
mortgagees, lessees pursuant to recorded leases or memoranda 
thereof, lienors and attaching creditors all as reflected by the indices 
in the registry of deeds and the documents referred to therein affecting 
the mortgaged premises, through the time of the recording of the 
complaint or the clerk’s certificate.  Failure to join any party in 
interest does not invalidate the action nor any subsequent proceedings 
as to those joined.  Failure of the mortgagee to join, as a party in 
interest, the holder of any public utility easement recorded subsequent 
to the mortgage and prior to commencement of foreclosure 
proceedings is deemed consent by the mortgagee to that easement.  
Any other party having a claim to the real estate whose claim is not 
recorded in the registry of deeds as of the time of recording of the 
copy of the complaint or the clerk’s certificate need not be joined in 
the foreclosure action, and any such party has no claim against the 
real estate after completion of the foreclosure sale, except that any 
such party may move to intervene in the action for the purpose of 
being added as a party in interest at any time prior to the entry of 
judgment.  Within 10 days of submitting the complaint for filing with 
the court, the mortgagee shall provide a copy of the complaint or of 
the clerk’s certificate as submitted to the court that prominently states, 
immediately after the title, the street address of the mortgaged 
premises, if any, and the book and page number of the mortgage, if 
 
14 
any, to the municipal tax assessor of the municipality in which the 
property is located and, if the mortgaged premises is manufactured 
housing as defined in Title 10, section 9002, subsection 7, to the 
owner of any land leased by the mortgagor.  The failure to provide the 
notice required by this section does not affect the validity of the 
foreclosure sale. 
For purposes of this section, “public utility easements” means 
any easements held by public utilities, as defined in Title 35-A, 
section 102; sewer districts, as defined in Title 38, section 1251; or 
sanitary districts, as formed under Title 38, chapter 11. 
The acceptance, before the expiration of the right of redemption 
and after the commencement of foreclosure proceedings of any 
mortgage of real property, of anything of value to be applied on or to 
the mortgage indebtedness by the mortgagee or any person holding 
under the mortgagee constitutes a waiver of the foreclosure unless an 
agreement to the contrary in writing is signed by the person from 
whom the payment is accepted or unless the bank returns the payment 
to the mortgagor within 10 days of receipt.  The receipt of income 
from the mortgaged premises by the mortgagee or the mortgagee’s 
assigns while in possession of the premises does not constitute a 
waiver of the foreclosure proceedings of the mortgage on the 
premises. 
The mortgagee and the mortgagor may enter into an agreement 
to allow the mortgagor to bring the mortgage payments up to date 
with the foreclosure process being stayed as long as the mortgagor 
makes payments according to the agreement.  If the mortgagor does 
not make payments according to the agreement, the mortgagee may, 
after notice to the mortgagor, resume the foreclosure process at the 
point at which it was stayed. 
(Footnote omitted.)