Title: Wells Fargo Bank, N.A. v. Welch-Gallant

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2017 ME 105 
Docket: 
Oxf-15-401 
Submitted 
   On Briefs: May 26, 2016 
Argued: 
September 14, 2016 
Decided: 
May 25, 2017 
 
Panel: 
ALEXANDER, GORMAN, JABAR, HJELM, and HUMPHREY, JJ. 
 
 
WELLS FARGO BANK, N.A. 
 
v. 
 
CLARA WELCH-GALLANT 
 
 
GORMAN, J. 
[¶1]  Wells Fargo Bank, N.A., appeals from a judgment of the District 
Court (Rumford, Beliveau, J.) dismissing its foreclosure complaint against 
Clara Welch-Gallant as a sanction, pursuant to M.R. Civ. P. 16A(d), for pretrial 
misconduct.  Wells Fargo argues that the court erred by dismissing the 
complaint with prejudice rather than without prejudice.  We vacate the 
judgment and remand to allow the court to follow the process we recently 
outlined in Green Tree Servicing, LLC v. Cope, 2017 ME 68, --- A.3d ---, issued 
on April 11, 2017. 
 
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I.  BACKGROUND 
[¶2]  Wells Fargo instituted foreclosure proceedings against 
Welch-Gallant in the District Court on February 24, 2014, alleging that, in 
2012, Welch-Gallant executed a promissory note in the amount of $70,700 in 
favor of Embrace Home Loans, Inc. (EHL), as well as a mortgage on her real 
property in Mexico, Maine, in favor of Mortgage Electronic Registration 
Systems, Inc. (MERS), “as nominee for [EHL]” to secure the note.  Wells Fargo 
alleged that it was the holder of the note and that MERS had assigned the 
mortgage to it in 2013.  Welch-Gallant timely answered the complaint.  See 
M.R. Civ. P. 12(a). 
 
[¶3]  The court (Carlson, J.) issued a scheduling order dated March 18, 
2014, setting June 18, 2014, as the discovery deadline.  By July 1, 2014, both 
parties had filed their witness and exhibit lists; Welch-Gallant named herself 
as her sole witness and indicated that she intended to offer no exhibits.  On 
September 26, 2014,1 the court conducted a pretrial conference and issued an 
order that day noting that “[d]iscovery [was] complete” and setting the trial 
for February 5, 2015, giving “30 days[’] prior notice for out of state witness.”  
                                         
1  On July 3, 2014, we issued our opinion in the matter of Bank of America, N.A. v. Greenleaf, 
2014 ME 89, 96 A.3d 700.  Neither party brought that decision to the attention of the court. 
 
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[¶4]  On the day of trial, Wells Fargo moved to dismiss without 
prejudice its complaint against Welch-Gallant on the ground that, because its 
mortgage assignment was from MERS as “nominee,” it lacked standing to seek 
foreclosure pursuant to our decisions in Bank of America, N.A. v. Greenleaf, 
2014 ME 89, 96 A.3d 700 and Mortgage Electronic Registration Systems, Inc. v. 
Saunders, 2010 ME 79, 2 A.3d 289.  After a nontestimonial hearing at which 
Welch-Gallant asked that Wells Fargo be sanctioned, the court (Beliveau, J.) 
ordered the action dismissed with prejudice.  
[¶5]  Wells Fargo moved to alter or amend the judgment to provide for a 
dismissal without prejudice, arguing that its lack of standing deprived the 
court of subject matter jurisdiction and that the absence of subject matter 
jurisdiction allowed the court to dismiss only without prejudice.  
Welch-Gallant opposed the motion, arguing that a dismissal with prejudice 
was within the court’s discretion pursuant to M.R. Civ. P. 41(a)(2) for Wells 
Fargo’s failure to be prepared for trial and filing of a “surprise” motion to 
dismiss instead.  
[¶6]  By decision dated July 21, 2015, the court denied Wells Fargo’s 
motion to alter or amend the judgment, maintaining the dismissal with 
 
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prejudice, and also ordered Wells Fargo to pay Welch-Gallant’s attorney fees 
in defending the action.  Wells Fargo appeals.  
II.  DISCUSSION 
[¶7]  As we recently reiterated in Green Tree Servicing, LLC v. Cope, 
Maine’s trial courts may sanction parties “for various types of pretrial 
misconduct,” and among the sanctions that courts are authorized to impose 
are dismissals with prejudice.  2017 ME 68, ¶ 15, --- A.3d ---.  In this case, 
Wells Fargo argues that, based upon its representations to the court that it 
lacked standing to pursue the matter, the trial court was authorized only to 
dismiss the case without prejudice.  For the reasons we explained in Cope, id. 
¶ 18, we disagree, but we do agree that the process used by the trial court 
here did not entirely follow the procedural steps that we have since stated a 
court should take before imposing the sanction of dismissal with prejudice, 
see id. ¶¶ 19-22.  We therefore remand the case to the District Court to allow it 
to conduct a proceeding that comports with the process articulated in Cope.  
The entry is: 
Judgment vacated.  Remanded for further 
proceedings consistent with this opinion.  
 
 
 
 
 
 
 
 
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Daniella 
Massimilla, 
Esq. 
(orally), 
Litchfield 
Cavo, 
LLP, 
Lynnfield, 
Massachusetts, for appellant Wells Fargo Bank, N.A. 
 
David W. Austin, Esq. (orally), Rumford, for appellee Clara Welch-Gallant 
 
 
Rumford District Court docket number RE-2014-8 
FOR CLERK REFERENCE ONLY