Opinion ID: 2324257
Heading Depth: 2
Heading Rank: 1

Heading: Standing and Substitution of Parties

Text: [¶ 9] Martha contends that because Liquidation Properties did not have standing when it filed its complaint, the summary judgment should be vacated and the case dismissed. She also argues that the court abused its discretion when it substituted Kondaur as the named party because the proper plaintiff was not difficult to determine, the filing of this complaint without standing was not an understandable mistake, and substitution of Kondaur altered the factual allegations in the action. [¶ 10] We review the issue of a party's standing de novo. JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 7, 10 A.3d 718, 719. A party may raise the issue at any time, including during an appeal. Id. In order to enforce a debt obligation secured by a mortgage and note, a party must be in possession of the note. Mortg. Elec. Registration Sys., Inc. v. Saunders, 2010 ME 79, ¶ 12, 2 A.3d 289, 296. If a plaintiff lacks standing, then, in certain circumstances, the real party in interest may be substituted as the plaintiff. M.R. Civ. P. 17(a); Harp, 2011 ME 5, ¶ 12, 10 A.3d at 720. [¶ 11] As reflected in the summary judgment record, when the complaint was filed in February 2009, Liquidation Properties did not hold the note or the mortgage. Liquidation Properties did not allege in its complaint or amended complaint that it held the note. Absent an interest in the note, Liquidation Properties did not have standing to commence this foreclosure action. See Saunders, 2010 ME 79, ¶ 15, 2 A.3d at 297. [¶ 12] We next consider whether substitution of Kondaur for Liquidation Properties was proper pursuant to M.R. Civ. P. 17(a). See Harp, 2011 ME 5, ¶ 12, 10 A.3d at 720; Saunders, 2010 ME 79, ¶ 16, 2 A.3d at 297. Substitution of plaintiffs is proper when the correct party is difficult to determine or an understandable mistake has been made and the substitution does not alter in any way the factual allegations pertaining to events or participants involved in the suit. Saunders, 2010 ME 79, ¶ 18, 2 A.3d at 298 (alteration omitted) (quotation marks omitted); Tisdale v. Rawson, 2003 ME 68, ¶ 17, 822 A.2d 1136, 1141. [¶ 13] In Saunders, a foreclosure action was commenced by Mortgage Electronic Registration Systems (MERS), an entity that had limited rights to the mortgage as a nominee for the lender, but lacked standing to foreclose because it did not have an interest in the note. 2010 ME 79, ¶¶ 10, 15, 2 A.3d at 295, 297. Noting that we had not previously addressed MERS's standing to foreclose, we concluded that it was an understandable mistake for MERS to file the foreclosure action when it did not have standing. Id. ¶ 19, 2 A.3d at 298. Accordingly, we discerned no abuse of discretion in the Rule 17(a) substitution of the bank that held the note and the mortgage for MERS. Id. ¶ 19, 2 A.3d at 299; see also Harp, 2011 ME 5, ¶¶ 9, 12, 10 A.3d at 719-20 (suggesting that a bank's premature filing of a foreclosure action when it owned the note, but not the mortgage, could have been an understandable mistake justifying substitution of parties). [¶ 14] This case is different. When Liquidation Properties commenced this foreclosure action in February 2009, it had no interest in either the note or the mortgage. Because it would not have been difficult for Liquidation Properties to determine, through the exercise of due diligence, that it did not have standing to foreclose, the premature filing of this action was not an understandable mistake that would justify substitution of parties pursuant to Rule 17(a). [1] The Rule was not intended to provide relief from careless errors regarding matters as fundamental as this. See 2 Charles Harvey, Maine Civil Practice § 17:1 at 522 (3d ed.2011); Fed. R.Civ.P. 17(a) advisory committee's note to 1966 amend.; 6A Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1555 (2010) (the rule should be applied only to cases in which substitution of the real party in interest is necessary to avoid injustice); Sherman L. Cohn, The New Federal Rules of Civil Procedure, 54 Geo. L.J. 1204, 1238 (1966). [¶ 15] Nevertheless, because the Hankinses did not challenge the motion to substitute in the trial court and Martha challenges the substitution for the first time on appeal, the issue is unpreserved and we conduct obvious error review for a seriously prejudicial error tending to produce a manifest injustice. Dupuis v. Soucy, 2011 ME 2, ¶ 27 n. 12, 11 A.3d 318, 325 (quotation marks omitted). Here, substituting Kondaur, the ostensible proper party, as the named plaintiff did not alter the underlying allegations of this foreclosure action or tend to produce a manifest injustice. We discern no obvious error.