GMAC Mortgage LLC v. Saunders, No. 22-1-10 Bncv (We sley, J., Jan. 26, 2011)

[The text of this Vermont trial court opinion is un official. It has been reformatted from the origina l. The accuracy of the text and the accompanying data included in the Vermont trial cou rt opinion database is not guaranteed.] S TATE OF V ERMONT

S UPERIOR C OURT

GMAC M ORTGAGE LLC │

Plaintiff │ │ B ENNINGTON U NIT , C IVIL D IVISION

v. │ Docket No. 22-1-10 Bncv Mary L Saunders, et al │

Defendant

v. Lizanne Degan Proposed Intervenor │ │

ORDER DENYING MOTION TO INTERVENE

Plaintiff brought this foreclosure action on 1/21/ 2010. Service was complete on Defendants Mary L. Saunders and Keith Casey on 1/25 /2010 and on Defendant Citifinancial, Inc. on 2/3/2010. Default judgment issued against Citifinancial on 5/12/2010. Following a hearing on Plaintiff’s moti on for summary judgment against Defendants Saunders and Casey, the Court granted De fendants one week to seek mediation pursuant to recently enacted 12 V.S.A. § 4633, indicating in its entry issued 7/29/2010 that the proceedings would be stayed pend ing mediation. The Court approved Defendants’ request for mediation by entry issued 9 /2/2010, and the parties have specified Rodney McPhee, Esq. as the mediator by de signation filed 9/28/2010. There is no report, as yet, regarding the results of mediati on.

On 11/3/2010, purporting to represent an intereste d party, Lizanne Degan, Attorney A. Jeffrey Taylor entered his appearance a nd filed a Motion to Dismiss, claiming that Plaintiff was without standing to pro secute the foreclosure action. In response, the Court held on 11/17/2010 that Ms. Deg an’s motion could not be accepted for filing as she had not sought leave to intervene pursuant to V.R.C.P. 24.

Proposed Intervenor Degan has now filed a motion p ursuant to Rule 24 by which she claims an interest in the subject property aris ing from a judicial lien, and seeks to prosecute common questions of law and fact which sh e claims are inherent in the foreclosure action; namely, her contention that Pla intiff is without standing and that her judicial lien must be accorded priority over the no te and mortgage which are the subject of Plaintiff’s foreclosure complaint.

Plaintiff opposes the motion to intervene. It is undisputed that Ms. Degan’s judicial lien, based on a restitution judgment agai nst Defendant Saunders, was not

recorded in the Manchester Land Records until 7/29/ 2010, more than six months following Plaintiff’s recording of its foreclosure complaint on 1/21/2010. Thus, at the2

time she recorded her judgment, Ms. Degan was on re cord notice of the pending foreclosure action and became subject to any judgme nt “without further notice or service”. 12 V.S.A.§ 4523. Having attempted to es tablish an interest in the subject real

estate after record notice of the foreclosure actio n had been perfected, Ms. Degan is entitled to neither party status, nor redemption ri ghts. Her suggestion that her motion to intervene should be granted because there is no fin al judgment is unsupported by any authority, and inconsistent with the statutory sche me represented by §4523 and § 4524, both of which establish summary proceedings without further notice or hearing for extinguishing the interests of claimants which were filed after the filing of the foreclosure complaint in the town clerk’s office.

Even assuming that the above-cited statutes did no t effect a complete bar to Ms. Degan’s attempt to seek party status to challenge t he priority of Plaintiff’s mortgage, she has failed to show that she has any legal claims th at merit granting her motion to intervene. By her claim that Plaintiff’s mortgage is a nullity and without legal existence, due to the presence in the chain of title of Mortga ge Electronic Registration Systems (MERS), Ms. Degan extrapolates from two trial court decisions, Deutsche Bank v

Parisella, et al , Doc. No. S0758 -09 Cnc (Toor,J.), which in turn r elied on Judge Cohen’s ruling in MERS v Johnston , Doc. No. 420-6-09 Rdcv. However, neither of thos e holdings stand for the proposition that a mortgage which was granted initially, or later assigned, to MERS voids the underlying obligation o r makes the note and mortgage unenforceable. Rather, as Judge Cohen allowed in U.S. Bank National Association v Wyman, et al , Doc. No. 466-6-09 Rdcv (Entry Order Re Motion for Default Judgment, 10/20/2009), this Court has addressed the apparent lack of standing on the face of complaints involving MERS by granting the plaintiff an opportunity within a reasonable

time to demonstrate “that it is entitled to enforce the Promissory Note pursuant to 9A V.S.A. § 3-301”. In a majority of cases, plaintiff s in such situations have succeeded in remedying the initial defects in pleading.

In the current action, the Court perceived no insu fficiency on the face of Plaintiff’s complaint with regard to standing. The complaint recites that mortgagors granted a note to GMAC Mortgage Corporation d/b/a d itech.com. Although MERS was the original mortgagee, the complaint further alleg es that as nominee for GMAC Mortgage Corporation d/b/a ditech.com, MERS assigne d the mortgage to Plaintiff, GMAC Mortgage, LLC. Most importantly, the complain t alleges at ¶ 6 that the promissory note executed in favor of GMAC Mortgage Corporation d/b/a ditech.com “was endorsed in blank and Plaintiff is in possessi on of the note”. This allegation directly addresses the defect in standing identifie d by Judge Cohen, when he expressed concern that “the Court cannot allow the assignee o f only a security interest to enforce the mortgage deed, as this could expose the obligor to a double liability; a ‘person to enforce’, 9A V.S.A. § 3-301, could later rightly se ek to enforce the unsecured obligation.” Wyman at p. 4. Contrary to Wyman , where the complaint was silent as to the status of the original note, Plaintiff here alleges that it is a holder, legally entitled to enforce the promissory note and its underlying mort gage, since it is currently in physical possession of the note, endorsed in blank. See, 9A V.S.A.§ 3-205(b)(blank indorsement becomes payable to bearer). In short, the spectre of some other holder entitled to enforce3

the note - which was the principal concern of Judge Cohen and others who have questioned standing sua sponte in transactions in which MERS role as nominee is inadequately explained - is absent when Plaintiff s upports its claim of assignment with possession of the original note, properly indorsed.

As explained above, Ms. Degan has not demonstrated that she has any right to intervene as a junior lienholder attempting to esta blish an interest after Plaintiff provided

record notice of this foreclosure action. Even if her claim was not absolutely barred by

the notice statute, she has established no colorabl e basis for the claim that her judgment lien is entitled to priority over the note and mort gage now held by Plaintiff.

Dated at Bennington this day of , 2011.

_____________________________ John P. Wesley Superior Court Judge