Opinion ID: 2679915
Heading Depth: 3
Heading Rank: 3

Heading: Connelly’s Affirmative Defenses

Text: [¶47] Although we could vacate the grant of summary judgment on Lubar’s foreclosure complaint solely for the reasons discussed above, see Raggiani, 2009 ME 120, ¶ 8, 985 A.2d 1, we briefly address one aspect of Connelly’s arguments concerning his affirmative defenses and note that discovery remains to be completed regarding those issues. 20 [¶48] Connelly alleged affirmative defenses in his answer to Lubar’s complaint for foreclosure. These include defenses based on Lubar’s and the Trust’s alleged violations of the Maine Consumer Credit Code, 9-A M.R.S. §§ 1-101 to 12-107, 14 that, Connelly argues, render the mortgage and note unenforceable as to him, void, or subject to rescission. Specifically, Connelly argues that genuine disputes of material fact exist in four respects concerning defenses he asserts under the Consumer Credit Code: whether (1) the Trust was a “creditor” as defined in 9-A M.R.S. § 1-301(17); (2) the Trust’s closing attorney, as the Trust’s agent, unlawfully induced Connelly to sign the note and mortgage, citing 9-A M.R.S. §§ 9-401, 9-408 (2013); (3) the Trust failed to provide the required notice of his right to rescind at closing and whether Connelly timely exercised his right to rescind, see 9-A M.R.S. § 8-204;15 and (4) the Trust failed to inform Connelly of his right to choose a title attorney, see 9-A M.R.S. §§ 9-101, 9-303 (2013). [¶49] Most, though not all, of these alleged defenses hinge on a determination that the Trust was, at the time of the closing, a “creditor” as defined 14 Because the closing at issue in this matter occurred on March 31, 2008, the statute in effect at that time applies. 15 Title 9-A M.R.S., article 8, was repealed by P.L. 2011, ch. 427, § A-14 (effective Sept. 28, 2011); see P.L. 2011, ch. 427, § A-15 (effective Sept. 28, 2011) (enacting the Maine Consumer Credit Code - Truth-in-Lending, codified at 9-A M.R.S. §§ 8-501 to 8-511 (2013)). Connelly also cites in his brief generally to a section of the federal counterpart to the Maine Consumer Credit Code’s truth-in-lending provisions, the Truth in Lending Act, 15 U.S.C.A. § 1635(a) (West, Westlaw through P.L. 113-74 (excluding P.L. 113-66, 113-67, and 113-73), approved Jan. 16, 2014). 21 in 9-A M.R.S. § 1-301(17). But see 9-A M.R.S. §§ 8-103(1-A)(L), 8-204. Connelly thus first argues that the court erred in determining, based on the summary judgment record properly before it, that the Trust is not a “creditor” as defined in section 1-301(17) or in failing to find that a genuine dispute of material fact exists concerning the Trust’s status as a “creditor.” [¶50] To avoid summary judgment on the basis of its affirmative defenses, “the nonmoving party must do more than state its affirmative defense; it must offer admissible evidence in support of that defense” by alleging facts in its statement of material facts sufficient to establish “that the summary judgment record contains disputed issues of fact to generate these defenses.” Blue Star Corp. v. CKF Props., LLC, 2009 ME 101, ¶ 25, 980 A.2d 1270; Bay View Bank, N.A. v. Highland Golf Mortgagees Realty Trust, 2002 ME 178, ¶ 11, 814 A.2d 449. [¶51] In this case, the court affirmatively determined that the Trust was not a “creditor” as defined in 9-A M.R.S. § 1-301(17). That determination appears to have constituted the primary, if not only, reason for the court’s conclusion that Connelly failed to raise a genuine dispute of material fact concerning his affirmative defenses. However, the court’s determination is not supported by the record, which instead evidences a genuine dispute of material fact on that issue. [¶52] Lubar’s statement of material facts asserts that the promissory note that was executed by Connelly, and that was secured by mortgages on the Wells 22 and Belmont Properties, was executed and delivered to the Trust, and the note, on its face, shows that the Trust was the entity to which the debt was initially payable. Lubar’s affidavit offered in support of his statement of material facts also asserts that in the normal course of his duties he operates and manages “the lending business of The Clover Trust, which is a mortgage lender licensed by the Massachusetts Division of Banks.” [¶53] Additionally, to be a creditor as that term is defined in 9-A M.R.S. § 1-301(17), the person or entity must, in relevant part, have “extended credit more than 25 times, or more than 5 times for transactions secured by a dwelling, in the preceding calendar year,” or if that numerical standard is not met in the preceding calendar year, in the current calendar year. Alternatively, “[n]otwithstanding the provisions of this section,” a creditor is a person or entity “who originates 2 or more high-rate, high-fee mortgages,” which term is defined in 9-A M.R.S. § 8-103, in any twelve-month period or “who originates one or more such mortgages through a loan broker,” which term is also defined by statute, in any twelve-month period. 9-A M.R.S. §§ 1-301(17), 8-103(1-A)(Q),16 10-102(1).17 16 Title 9-A M.R.S. § 1-301(17) (2008) states that “high-rate, high fee mortgage” is defined at 9-A M.R.S. § 8-103(F-1) (2008), but it is apparent that the definition is instead found at 9-A M.R.S. § 8-103(1-A)(Q) (2008), which states that a “‘[h]igh-rate, high-fee mortgage’ means a residential mortgage loan in which the terms of the loan meet or exceed one or more of the thresholds defined in” 9-A M.R.S. § 8-103(1-A)(FF) (2008). 17 Title 9-A M.R.S. § 10-102(1) was amended by P.L. 2009, ch. 248, § 2 (effective Sept. 12, 2009). 23 [¶54] Lubar and the Trust arguably originated two apparently high-rate, high-fee mortgages in this case. Regardless, the statements of material facts, viewed in a light most favorable to Connelly, establish that the Trust originated at least one residential mortgage loan through loan broker Ben Greenblott or loan broker Beechwood Mortgage in a twelve-month period and that the terms of the loan included an adjustable interest rate of 6.25% over the prime rate with a minimum interest rate of 11.5%. [¶55] Although determining whether the two mortgages here are “high-rate, high-fee mortgage[s]” as defined by the Code, and whether Greenblott or Beechwood is a “loan broker,” is a fact-intensive process that may require additional facts and analysis, see 9-A M.R.S. §§ 1-301(17), 8-103(1-A)(D), (Q), (U), (FF), 10-102(1), Connelly has at least demonstrated a genuine issue of material fact as to whether the Trust was a “creditor” under at least one of the alternative definitions in 9-A M.R.S. § 1-301(17) sufficient to avoid summary judgment in this case. [¶56] Additionally, viewing the facts in a light most favorable to Connelly—including that Connelly never met Greenblott or Lubar, that he never applied for the loan, that he was induced at closing to enter into the loan based on Lubar’s agent’s misrepresentations, that the Wells Property was Connelly’s primary residence, and that Lubar and his agent(s) knew or should have known that 24 the Wells Property was Connelly’s primary residence—the record is rife with genuine disputes of fact material to deciding the issues raised in this case, including Connelly’s affirmative defenses. Through discovery, additional facts may come to light to support allegations of fraud or undue influence that Connelly suggested at oral argument may be forthcoming. [¶57] We therefore vacate the summary judgment for these reasons as well as those discussed in section B above and remand the matter for further development of the facts and issues.18 We need not and do not address Connelly’s additional contentions on appeal concerning his affirmative defenses. The entry is: Judgment vacated and remanded for further proceedings. On the briefs and at oral argument: Susan B. Driscoll, Esq., Bergen & Parkinson, LLC, Saco, for appellant Frederick W. Connelly John A. Turcotte, Esq., Ainsworth, Thelin & Raftice, P.A., South Portland, for appellee Lewis Lubar, Trustee of The Clover Trust York County Superior Court docket number RE-2011-177 FOR CLERK REFERENCE ONLY 18 We offer no opinion on the ultimate viability of Connelly’s affirmative defenses or whether each provision of the Maine Consumer Credit Code cited by Connelly provides a basis for an affirmative defense. These issues must be resolved on remand after completion of discovery and further proceedings.