Dernier v. U.S. Bank National Ass’n, No. 144-3-11 Wrcv (DiMauro, J., Jan. 26, 2015).

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the 

accompanying data included in the Vermont trial court opinion database is not guaranteed.]

STATE OF VERMONT

SUPERIOR COURT CIVIL DIVISION

Windsor Unit Docket No. 144-3-11 Wrcv

PETER DERNIER & 

NICOLE DERNIER,

Plaintiffs

v.

U.S. BANK NATIONAL ASS’N,

as Trustee for CSMC Mortgage-Backed

Pass-Through Certificates, Series 2006-3,

Defendant

OPINION AND ORDER RE: MOTION FOR SUMMARY JUDGMENT (#12)

The Defendant, U.S. Bank National Association, has moved for summary judgment. The 

Plaintiffs, Peter and Nicole Dernier, oppose the motion. Upon review of submitted briefs and 

supporting statements of facts, the Defendant’s motion is denied.

Procedural History

This is a declaratory judgment action between the Plaintiff homeowners and the 

Defendant bank, filed by the Plaintiffs on March 23, 2011 and seeking a declaration of the 

Defendant’s rights to enforce the Plaintiffs’ mortgage and promissory note. On October 20, 

2011, the Plaintiffs moved for leave to file a second amended complaint. On June 12, 2012, the 

court denied the Plaintiffs’ motion and granted the Defendant’s motion to dismiss. The Plaintiffs 

appealed the dismissal to the Vermont Supreme Court as Dernier v. Mortgage Network, Inc., 

2013 VT 96, 195 Vt. 113. On appeal, the Court affirmed the court’s dismissal as to some issues 

in the Plaintiffs’ second amended complaint and reversed and remanded as to others. It is now 

before this court on remand.

On December 1, 2014, the Defendant moved for summary judgment on the remaining 

issues. On January 5, 2015, the Plaintiffs responded. This decision follows.

The Defendant is represented by Andre D. Bouffard, Esq. The Plaintiff is represented by 

Russell D. Barr, Esq.

Summary Judgment Standard

Under Vermont Rule of Civil Procedure 56, summary judgment is appropriate “if the 

movant shows that there is no genuine dispute as to any material fact and the movant is entitled 

to judgment as a matter of law.” V.R.C.P. 56(a). When ruling on a motion for summary 
Page 2 of 5

judgment, the court must take the evidence in a light most favorable to the party opposed to 

summary judgment. Summary judgment must not be utilized as a substitute for a determination 

on the merits of the claims if there is any evidence presented by the party opposed to summary 

judgment that creates an issue of material fact. The trial court must not consider the relative 

weight of the evidence. Fritzeen v. Trudell Consulting Engineers, Inc., 170 Vt. 632 (2000). It is 

not the function of the trial court to make findings of fact in connection with a motion for 

summary judgment even where the record appears to lean strongly in one direction. Booska v. 

Hubbard Insurance Agency, Inc., 160 Vt. 305, 309 (1993). The court must resolve all doubts in 

favor of the non-moving party. Dillon v. Champion Jog Bra, Inc., 175 Vt. 1 (2002). The court 

must allow the non-moving party the benefit of all reasonable doubts and inferences. Foster & 

Gridley v. Winner, 169 Vt. 621 (1999). 

In ruling on a motion for summary judgment, the court must regard all properly 

supported allegations of fact presented by the party opposed to summary judgment as true. 

Mellin v. Flood Brook Union School Dist., 173 Vt. 202 (2001). The party opposed to summary 

judgment may not rest on the allegations in the pleadings to rebut credible documentary evidence 

or affidavits. Gore v. Green Mountain Lakes, Inc. 140 Vt. 262 (1981). Where a witness gives 

contradictory or internally inconsistent testimony the court will construe the testimony in a light 

most favorable to the party opposed to summary judgment.

Facts

The factual basis for this order is derived from the Plaintiffs’ and the Defendant’s 

statements of facts. Many of the facts alleged by both parties are not material to the dispute or 

are material only to issues already disposed of by the Supreme Court. Accordingly, this is a 

redacted recitation of facts. 

1. On October 7, 2005, Plaintiff Peter Dernier executed a promissory note for 

$245,250.00, naming Kittridge Mortgage Corporation as lender.

2. There is a version of the promissory note that bears one indorsement, from Kittridge 

Mortgage Corporation to Mortgage Network, Inc. (Plaintiffs’ Exhibit A).

3. There is a version of the promissory note that purportedly bears two indorsements,

one from Kittridge Mortgage Corporation to Mortgage Network, Inc., and one from 

Mortgage Network, Inc. in blank. (Plaintiffs’ Exhibit 5).

4. The alleged indorsement from Mortgage Network, Inc. in blank is an affixed stamp 

which reads:

Pay to the order of ** 

Without Recourse__________

Mortgage Network, Inc. 

By: Chad M. Goodwin

Pipeline Manager

5. A signature is superimposed over the stamp.
Page 3 of 5

6. The authenticity of this signature is disputed. The Plaintiffs have supplied an affidavit 

of a Chad M. Goodwin, stating that he was an employee of Mortgage Network, Inc. 

from 2000 to 2013, and that the signature superimposed over the stamp is not his 

signature. The affidavit was subscribed and sworn before a notary public in the State 

of Maine. (Plaintiffs’ Exhibit U).

7. There is, according to the Defendant, a version of the promissory note which bears a 

specific indorsement from Mortgage Network, Inc. to the Defendant rather than an 

indorsement in blank. This version of the promissory note was not attached to the 

motion and for that reason is disregarded by the court.1

8. On October 7, 2005, the Plaintiffs also executed a mortgage deed to Kittridge 

Mortgage Corporation.

9. The mortgage was assigned from Kittridge Mortgage Corporation to Mortgage 

Electronic Registration Systems, Inc., as nominee for Mortgage Network, Inc., and 

from Mortgage Electronic Registration Systems, Inc. to the Defendant, by August 5, 

2013 at the latest.

10. The Defendant, directly or through its agents, has possession of the note and 

mortgage.

11. Mortgage Network, Inc. has disclaimed its interest, if any, in the Plaintiffs’ mortgage 

loan.

Discussion

As noted, this case was previously appealed to the Vermont Supreme Court as Dernier v. 

Mortgage Network, Inc. On remand, the sole question before this court is whether the Defendant 

presently lacks the right to enforce the Plaintiffs’ promissory note because the note was stolen.

Promissory notes are governed by the Uniform Commercial Code as adopted in Vermont, 

codified as Title 9A of the Vermont Statutes. Generally, a person is entitled to enforce a 

negotiable instrument if they have possession of the instrument and the instrument is payable to 

them. 9A V.S.A. § 3-301. In the case of a bearer instrument, transfer of possession of the 

instrument, whether voluntary or involuntary, is sufficient by itself to constitute a negotiation 

making the transferee a holder entitled to enforce the instrument. § 3-201. 

For the purposes of this motion, the Plaintiffs do not challenge the Defendant’s actual 

possession of the note, though of course, the Defendant would have to prove possession of the 

note in order to enforce it at any further proceeding. Rather, the Plaintiffs allege that the 

instrument was not properly negotiated to the Defendant because the indorsement in blank 

affixed to the note is a forgery. Essentially, the Plaintiffs rely on § 3-305(c), which states that “an 

obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument 

 

1 The discussion below would be no different even if this alleged version of the note were considered. 
Page 4 of 5

does not have the rights of a holder in due course and the obligor proves that the instrument is a 

lost or stolen instrument.” § 3-305(c). On summary judgment, this court therefore looks to 

whether the Plaintiffs have offered sufficient evidence to prove that the instrument is a lost or 

stolen instrument.2

Although Vermont’s § 3-305(c) adopts the language of the Uniform Commercial Code 

without alteration, there is surprisingly little guidance on this particular clause from any 

jurisdiction. In Mbaku v. Bank of America, the District of Colorado cited this section only to 

place the burden of proof on the party resisting enforcement to prove that a note is lost or stolen. 

Mbaku v. Bank of America, Docket No. 12-cv-00190-PAB-KLM, 2014 WL 4099313, at *7 (D. 

Colo. Aug. 20, 20140). In Sepehry-Fard v. MB Financial Services, the Northern District of 

California cited this clause only to reject its application on standing grounds. Sepehry-Fard v. 

MB Financial Services, Docket No. C 13-02784 JSW, 2014 WL 122436, at *4 (N.D. Cal. Jan. 

13, 2014). The remaining cases either refer to § 3-305(c) in passing or deal with the more 

complicated issue of whether an obligor is a holder in due course. Accordingly, the court’s 

application of § 3-305(c) to this context is a matter of first impression in the truest sense. 

As an initial matter, the court notes that the official comment’s only reference to this

clause of § 3-305(c) illustrates a completely different situation. Namely, the official comment 

states that “[t]he last sentence of subsection (c) allows the issuer of an instrument such as a 

cashier’s check to refuse payment in the rare case in which the issuer can prove that the 

instrument is a lost or stolen instrument and the person seeking enforcement does not have rights 

of a holder in due course.” § 3-305(c), official comment at 4. Nevertheless, because the language 

of the statute itself is broad, the court concludes for the clause can apply to this case.

The question, then, is whether the Plaintiffs can sufficiently show that the note was lost 

or stolen so as to survive summary judgment. The court concludes that the Plaintiffs have made 

such a showing.

Although the Plaintiffs have offered no direct evidence that the note was stolen, they 

have offered the affidavit of a Chad M. Goodwin, swearing that he is a former employee of 

Mortgage Network, Inc. and that the signature on the indorsement is not his own. Taken in the 

light most favorable to the Plaintiffs, a finder of fact could conclude that the indorsement was 

forged, and that, therefore, the note is not a bearer instrument. Further, a finder of fact could infer 

that because the indorsment was forged, the Defendant’s possession of the note is wrongful. In 

such an eventuality, Mortgage Network, Inc. would have the right to enforce the note, not the 

Defendants. 

In opposition, the Defendant has offered a reasonable argument for enforcement 

notwithstanding the allegedly irregular indorsement. It is true that, under § 3-403, an 

unauthorized or forged signature is nevertheless good “as the signature of the unauthorized 

 

2 The Defendant could also ultimately prevail by showing that they are a holder in due course. However, the 

Plaintiffs allege that the Defendant has refused to disclose through the discovery process any evidence regarding 

their negotiation for the Plaintiffs’ note. Accordingly, the court assumes for the purposes of this motion that the 

Defendant is not a holder in due course.
Page 5 of 5

signer,” and thus, so long as the forger was another agent of Mortgage Network, Inc., the 

indorsement in blank would still be valid. § 3-403(a). It is also true that a forged signature “can 

be ratified for all purposes of [Article 3].” § 3-403(a). However, the standard for summary 

judgment is clear that “summary judgment is improper where the evidence is subject to 

conflicting interpretations, regardless of a judge’s perceptions of the comparative plausibility of 

facts offered by either party or the likelihood that a party might prevail at trial.” Provost v. 

Fletcher Allen Health Care, Inc., 2005 VT 115, ¶ 15, 179 Vt. 545. Accordingly, the Defendant’s 

motion for summary judgment must be denied in favor of a trial on the merits.

Order

The Defendant’s motion for summary judgment is DENIED.

Dated at Woodstock, Vermont, this ___ day of January, 2015.

________________________

 Judge Theresa S. DiMauro

 Superior Court Judge