Court Opinion

ID: 4151487
Source: CourtListenerOpinion
Date Created: 2017-03-09 16:09:08.32922+00
Date Added: 2024-06-11T07:46:31.451888
License: Public Domain

MAINE	SUPREME	JUDICIAL	COURT	                                                               Reporter	of	Decisions	
Decision:	    2017	ME	42	
Docket:	      Ken-16-233	
Submitted	
  On	Briefs:	 February	10,	2017	
Decided:	     March	9,	2017	
	
Panel:	       ALEXANDER,	MEAD,	GORMAN,	HJELM,	and	HUMPHREY,	JJ.	
	
	
                                            DAVID	BORDETSKY	
                                                     	
                                                    v.	
                                                     	
                                            JAK	REALTY	TRUST	
	
	
GORMAN,	J.	

         [¶1]	 	 David	 Bordetsky	 appeals	 from	 a	 judgment	 in	 favor	 of	 JAK	 Realty	

Trust	 entered	 in	 the	 Superior	 Court	 (Kennebec	 County,	 Mullen,	 J.)	 after	 a	

nonjury	trial	on	Bordetsky’s	foreclosure	complaint.		Bordetsky	argues	that	the	

court	erred	by	applying	the	requirements	for	a	notice	of	default	and	right	to	

cure	 contained	 in	 14	M.R.S.	 §	 6111	 (2012)1	 to	 his	 attempt	 to	 foreclose.	 	 We	

agree	and	vacate	the	judgment.	

                                              I.		BACKGROUND	

         [¶2]	 	 On	 October	 3,	 2013,	 Bordetsky	 filed	 a	 complaint	 for	 foreclosure	

against	 the	 Trust,	 alleging	 that	 on	 April	 13,	 2009,	 Gregory	 O’Halloran—as	

    1	 	 Title	 14	 M.R.S.	 §	 6111	 has	 since	 been	 amended,	 but	 not	 in	 any	 way	 that	 affects	 this	 appeal.		

See	P.L.	2015,	ch.	36,	§§	1-2	(effective	Oct.	15,	2015)	(codified	at	14	M.R.S.	§	6111	(2016)).	
2	

trustee	of	the	Trust—executed	a	promissory	note	in	the	amount	of	$140,000,	

secured	 by	 a	 mortgage	 on	 property	 located	 in	 Benton;	 that	 the	 Trust	 had	

defaulted	on	the	note	as	of	August	13,	2011;	and	that	the	total	amount	due	on	

the	note,	including	principal,	interest,	and	late	charges,	was	$193,625.42.2		

         [¶3]	 	 After	 a	 nonjury	 trial,	 the	 court	 issued	 a	 judgment	 dated	 April	 15,	

2016,	 containing	 the	 following	 findings	 of	 fact,	 which	 are	 supported	 by	

competent	record	evidence.		O’Halloran	is	trustee	of	the	JAK	Realty	Trust;	the	

Trust’s	 beneficiaries	 are	 O’Halloran’s	 four	 daughters.	 	 On	 April	 13,	 2009,	 the	

Trust—through	 O’Halloran,	 as	 trustee—executed	 a	 document	 entitled	

“COMMERCIAL	NOTE”	in	the	amount	of	$140,000	in	favor	of	Bordetsky.		The	

note	 states	 that	 it	 is	 secured	 by	 a	 mortgage	 on	 real	 estate	 located	 at	

157	Wyman	 Road	 in	 Benton,	 and	 lists	 the	 same	 address	 as	 the	 “Borrower’s	

Address.”	 	 157	Wyman	 Road,	 Benton,	 is	 O’Halloran’s	 address.	 	 The	 note	 also	

states,	“This	note	evidences	a	loan	for	business	and	commercial	purposes	and	

not	for	personal,	household,	or	family	purposes.”		

     2		The	complaint	named	“Gregory	O’Halloran,	Trustee	of	JAK	Realty	Trust”	as	the	defendant	and	

O’Halloran	 individually	 as	 a	 party-in-interest.	 	 By	 amended	 complaint,	 Bordetsky	 also	 named,	 as	
parties-in-interest,	the	United	States,	based	on	a	federal	tax	lien	on	the	property;	the	State,	based	on	
a	state	tax	lien;	and	NETCO	Inc.,	based	on	a	writ	of	execution	on	the	property.		The	United	States,	
the	State,	and	NETCO	all	answered	the	complaint,	each	acknowledging	its	interest	in	the	property.		
Additional	parties	were	later	joined—the	Jerome	Lipman	Revocable	Trust	and	Robert	Larochelle	as	
plaintiffs,	and	Jessica	O’Halloran	Smart	as	a	party-in-interest.		None	of	these	persons	or	entities	is	a	
party	to	the	appeal.	
                                                                                     3	

      [¶4]	 	 On	 the	 same	 day,	 the	 Trust	 executed	 a	 mortgage	 in	 favor	 of	

Bordetsky	 on	 real	 property	 at	 157	 Wyman	 Road	 in	 Benton.	 	 The	 mortgage	

mentions	 no	 commercial	 purposes,	 and	 states	 only	 that	 the	 mortgage	 is	 to	

secure	payment	“in	accordance	with	the	terms	of	a	certain	promissory	note	of	

even	date.”		

      [¶5]	 	 The	 court	 determined	 that	 “the	 language	 of	 the	 agreement	

between	 the	 parties	 was	 ambiguous”	 as	 to	 whether	 it	 was	 residential	 or	

commercial	 in	 nature,	 and	 therefore	 considered	 extrinsic	 evidence—

O’Halloran’s	 testimony	 in	 particular—regarding	 the	 parties’	 intent	 in	

executing	the	note	and	mortgage.		Based	on	O’Halloran’s	testimony,	the	court	

further	 found	 that,	 at	 the	 time	 the	 note	 and	 mortgage	 were	 executed,	

Bordetsky	knew	that	O’Halloran	and	his	children	were	residing	at	the	Wyman	

Road	 property.	 	 O’Halloran	 has	 continued	 to	 reside	 there.	 	 Of	 the	 $140,000	

loaned	to	the	Trust,	$67,421.68	was	used	to	purchase	the	“Beckris,	LLC	loan,”	

a	“business	involvement”	in	which	the	Trust	was	purchasing	a	different	note	

and	 mortgage	 from	 Bordetsky.	 	 Most	 of	 the	 remaining	 loan	 proceeds—

$61,491.89—were	 used	 to	 pay	 O’Halloran	 as	 trustee;	 of	 that	 amount,	

O’Halloran	 used	 roughly	 $30,000	 to	 $40,000	 to	 fix	 up	 the	 Wyman	 Road	

property,	 and	 the	 remainder	 was	 used	 for	 O’Halloran’s	 living	 expenses,	
4	

including	 food,	 utilities,	 and	 clothing.	 	 Bordetsky	 was	 aware	 when	 the	 note	

and	 mortgage	 were	 executed	 that	 O’Halloran	 intended	 to	 use	 the	 loan	

proceeds	 for	 both	 commercial	 and	 household	 purposes.	 	 On	 these	 facts,	 the	

court	concluded	that	Bordetsky	was	required	to—but	did	not—	comply	with	

the	 requirements	 for	 a	 notice	 of	 default	 and	 right	 to	 cure	 contained	 in	

14	M.R.S.	 §	6111,	 and	 issued	 a	 judgment	 in	 favor	 of	 the	 Trust.	 	 Bordetsky	

timely	appeals.			

                                             II.		DISCUSSION	

         [¶6]		A	party	seeking	to	foreclose	a	mortgage	on	a	residential	property	

pursuant	 to	 14	 M.R.S.	 §	 6111	 must	 first	 comply	 with	 certain	 notice	

requirements.3		More	particularly,	“[a]	mortgagee	may	not	accelerate	maturity	

     3		Title	14	M.R.S.	§	6111	(2012)	provides	as	follows:	

         §	6111.	Notice	of	mortgagor’s	right	to	cure		
         	
                  1.	Notice;	 payment.		 With	 respect	 to	 mortgages	 upon	 residential	 property	
         located	 in	 this	 State	 when	 the	 mortgagor	 is	 occupying	 all	 or	 a	 portion	 of	 the	
         property	as	the	mortgagor’s	primary	residence	and	the	mortgage	secures	a	loan	for	
         personal,	family	or	household	use,	the	mortgagee	may	not	accelerate	maturity	of	the	
         unpaid	 balance	 of	 the	 obligation	 or	 otherwise	 enforce	 the	 mortgage	 because	 of	 a	
         default	 consisting	 of	 the	 mortgagor’s	 failure	 to	 make	 any	 required	 payment,	 tax	
         payment	or	insurance	premium	payment,	by	any	method	authorized	by	this	chapter	
         until	at	least	35	days	after	the	date	that	written	notice	pursuant	to	subsection	1-A	is	
         given	 by	 the	 mortgagee	 to	 the	 mortgagor	 and	 any	 cosigner	 against	 whom	 the	
         mortgagee	 is	 enforcing	 the	 obligation	 secured	 by	 the	 mortgage	 at	 the	 last	 known	
         addresses	 of	 the	 mortgagor	 and	 any	 cosigner	 that	 the	 mortgagor	 has	 the	 right	 to	
         cure	 the	 default	 by	 full	 payment	 of	 all	 amounts	 that	 are	 due	 without	 acceleration,	
         including	reasonable	interest	and	late	charges	specified	in	the	mortgage	or	note	as	
         well	 as	 reasonable	 attorney’s	 fees.	 	 If	 the	 mortgagor	 tenders	 payment	 of	 the	
         amounts	 before	 the	 date	 specified	 in	 the	 notice,	 the	 mortgagor	 is	 restored	 to	 all	
         rights	under	the	mortgage	deed	as	though	the	default	had	not	occurred.		
                                                                                                  5	

	
        1-A.	Contents	 of	 notice.		 A	 mortgagee	 shall	 include	 in	 the	 written	 notice	
under	subsection	1	the	following:		
	
        A.	The	mortgagor’s	right	to	cure	the	default	as	provided	in	subsection	1;		
        	
        B.	An	itemization	of	all	past	due	amounts	causing	the	loan	to	be	in	default;		
        	
        C.	An	itemization	of	any	other	charges	that	must	be	paid	in	order	to	cure	the	
        default;		
        	
        D.	 A	 statement	 that	 the	 mortgagor	 may	 have	 options	 available	 other	 than	
        foreclosure,	 that	 the	 mortgagor	 may	 discuss	 available	 options	 with	 the	
        mortgagee,	 the	 mortgage	 servicer	 or	 a	 counselor	 approved	 by	 the	 United	
        States	 Department	 of	 Housing	 and	 Urban	 Development	 and	 that	 the	
        mortgagor	is	encouraged	to	explore	available	options	prior	to	the	end	of	the	
        right-to-cure	period;	
        	
        E.	The	address,	telephone	number	and	other	contact	information	for	persons	
        having	 authority	 to	 modify	 a	 mortgage	 loan	 with	 the	 mortgagor	 to	 avoid	
        foreclosure,	 including,	 but	 not	 limited	 to,	 the	 mortgagee,	 the	 mortgage	
        servicer	and	an	agent	of	the	mortgagee;	
        	
        F.	The	name,	address,	telephone	number	and	other	contact	information	for	
        all	 counseling	 agencies	 approved	 by	 the	 United	 States	 Department	 of	
        Housing	and	Urban	Development	operating	to	assist	mortgagors	in	the	State	
        to	avoid	foreclosure;	and	
        	
        G.	Where	mediation	is	available	as	set	forth	in	section	6321-A,	a	statement	
        that	 a	 mortgagor	 may	 request	 mediation	 to	 explore	 options	 for	 avoiding	
        foreclosure	judgment.		
        	
        2.	Repealed.	
	
        3.	Notice	procedure.		A	mortgagee	shall	provide	notice	to	a	mortgagor	and	
any	 cosigner	 under	 this	 section	 to	 the	 last	 known	 addresses	 of	 the	 mortgagor	 and	
cosigner	by:		
	
        A.	 Certified	 mail,	 return	 receipt	 requested.	 For	 the	 purposes	 of	 this	
        paragraph,	the	time	when	the	notice	is	given	to	the	mortgagor	or	cosigner	is	
        the	 date	 the	 mortgagor	 or	 cosigner	 signs	 the	 receipt	 or,	 if	 the	 notice	 is	
        undeliverable,	the	date	the	post	office	last	attempts	to	deliver	it;	or	
        	
        B.	 Ordinary	 first	 class	 mail,	 postage	 prepaid.	 For	 the	 purposes	 of	 this	
        paragraph,	the	time	when	the	notice	is	given	to	the	mortgagor	or	cosigner	is	
        the	date	when	the	mortgagor	or	cosigner	receives	that	notice.	A	post	office	
6	

of	 the	 unpaid	 balance	 of	 [an]	 obligation	 or	 otherwise	 enforce	 [a]	 mortgage	

because	of	a	default”	unless	and	until	a	notice	of	default	and	right	to	cure	has	

been	provided	to	the	mortgagor.		14	M.R.S.	§	6111(1);	see	Bank	of	Am.,	N.A.	v.	

              department	certificate	of	mailing	to	the	mortgagor	or	cosigner	is	conclusive	
              proof	of	receipt	on	the	3rd	calendar	day	after	mailing.		
      	
               3-A.	Information;	Bureau	of	Consumer	Credit	Protection.		Within	3	days	
      of	providing	written	notice	to	the	mortgagor	as	required	by	subsections	1	and	1-A,	
      the	 mortgagee	 shall	 file	 with	 the	 Department	 of	 Professional	 and	 Financial	
      Regulation,	 Bureau	 of	 Consumer	 Credit	 Protection,	 in	 electronic	 format	 as	
      designated	by	the	Bureau	of	Consumer	Credit	Protection,	information	including:		
      	
               A.	 The	 name	 and	 address	 of	 the	 mortgagor	 and	 the	 date	 the	 written	 notice	
               required	 by	 subsections	 1	 and	 1-A	 was	 mailed	 to	 the	 mortgagor	 and	 the	
               address	to	which	the	notice	was	sent;		
               	
               B.	 The	 address,	 telephone	 number	 and	 other	 contact	 information	 for	
               persons	having	authority	to	modify	a	mortgage	loan	with	the	mortgagor	to	
               avoid	foreclosure,	including,	but	not	limited	to,	the	mortgagee,	the	mortgage	
               servicer	and	an	agent	of	the	mortgagee;	and		
               	
               C.	Other	information,	as	permitted	by	state	and	federal	law,	requested	of	the	
               mortgagor	by	the	Bureau	of	Consumer	Credit	Protection.	
      	
               3-B.	Report.		 On	 a	 quarterly	 basis,	 the	 Department	 of	 Professional	 and	
      Financial	Regulation,	Bureau	of	Consumer	Credit	Protection	shall	report	to	the	joint	
      standing	 committee	 of	 the	 Legislature	 having	 jurisdiction	 over	 insurance	 and	
      financial	services	matters	on	the	number	of	notices	received	pursuant	to	subsection	
      3-A.		To	the	extent	information	is	available,	the	report	must	also	include	information	
      on	the	number	of	foreclosure	filings	based	on	data	collected	from	the	court	and	the	
      Department	 of	 Professional	 and	 Financial	 Regulation,	 Bureau	 of	 Financial	
      Institutions	and	on	the	types	of	lenders	that	are	filing	foreclosures.		
               	
               4.		Repealed.	
      		
               4-A.	Letter	to	mortgagor.		Within	3	days	of	receiving	electronic	information	
      from	 the	 mortgagee	 as	 set	 forth	 in	 subsection	 3-A,	 the	 Department	 of	 Professional	
      and	Financial	Regulation,	Bureau	of	Consumer	Credit	Protection	shall	send	a	written	
      notice	 to	 the	 mortgagor	 that	 includes	 a	 summary	 of	 the	 mortgagor’s	 rights	 and	
      available	 resources,	 including	 information	 concerning	 the	 foreclosure	 mediation	
      program	as	established	in	section	6321-A.	
              	
              5.		Repealed.	
                                                                                        7	

Greenleaf,	2014	ME	89,	¶¶	18,	29,	96	A.3d	700	(requiring,	as	an	element	of	a	

foreclosure,	“evidence	of	[a]	properly	served	notice	of	default	and	mortgagor’s	

right	 to	 cure”	 in	 compliance	 with	 14	M.R.S.	 §	 6111	 (quotation	 marks	

omitted));	Chase	Home	Fin.	LLC	v.	Higgins,	2009	ME	136,	¶	11,	985	A.2d	508	

(same).	

      [¶7]		Not	all	attempts	to	foreclose	are	subject	to	section	6111,	however;	

pursuant	 to	 14	 M.R.S.	 §	 6111(1),	 only	 “[w]ith	 respect	 to	 mortgages	 upon	

residential	property	located	in	this	State	when	the	mortgagor	is	occupying	all	

or	 a	 portion	 of	 the	 property	 as	 the	 mortgagor’s	 primary	 residence	 and	 the	

mortgage	 secures	 a	 loan	 for	 personal,	 family	 or	 household	 use”	 must	 a	

mortgagee	 satisfy	 the	 requirements	 for	 a	 notice	 of	 default	 and	 right	 to	 cure	

contained	 in	 14	M.R.S.	 §	6111.	 	 In	 short,	 section	 6111(1)	 applies	 when	 three	

discrete	 facts	 are	 true:	 (1)	the	 mortgage	 is	 on	 residential	 property	 in	 Maine;	

(2)	the	mortgagor	occupies	the	property	as	his	primary	residence;	and	(3)	the	

mortgage	secures	a	loan	for	personal,	family,	or	household	use.		Thus,	the	first	

two	facts	regard	the	nature	and	use	of	the	property	that	is	the	subject	of	the	

mortgage,	and	the	third	fact	regards	the	nature	of	the	loan	that	the	mortgage	

secures.		
8	

      [¶8]	 	 The	 court’s	 decision	 here	 rests	 entirely	 on	 its	 determination	 that	

the	 notice	 requirements	 of	 section	 6111	 applied	 to	 Bordetsky’s	 foreclosure	

action	and	that	Bordetsky	failed	to	meet	his	burden	of	establishing	that	those	

requirements	 were	 satisfied.	 	 There	 is	 no	 dispute—and	 Bordetsky	

stipulated—that	 he,	 as	 mortgagee,	 did	 not	 comply	 with	 section	 6111.		

Bordetsky	 challenges	 the	 court’s	 determination	 that	 section	 6111	 applies	 to	

this	foreclosure.			

      [¶9]		As	to	the	first	two	requirements,	the	court	found	that	the	mortgage	

is	on	real	property	located	at	157	Wyman	Road	in	Benton,	Maine;	O’Halloran	

“has	 been	 residing	 at	 the	 subject	 property”	 at	 least	 since	 2009;	 and	

O’Halloran’s	 four	 daughters	 also	 resided	 there	 as	 well.	 	 These	 findings	 are	

supported	 by	 O’Halloran’s	 testimony	 and	 indeed,	 Bordetsky	 has	 never	

challenged	that	a	residential	home	is	situated	on	the	Wyman	Road	property.		

The	 crux	 of	 the	 appeal	 is	 the	 trial	 court’s	 determination	 as	 to	 the	 third	

requirement—that	 the	 mortgage	 “secures	 a	 loan	 for	 personal,	 family	 or	

household	use.”		14	M.R.S.	§	6111(1).			

      [¶10]	 	 Because	 the	 note	 is	 the	 document	 that	 memorializes	 the	 loan,	

see	Harbor	Funding	Corp.	v.	Kavanagh,	666	A.2d	498,	499	(Me.	1995),	the	court	

must	interpret	the	note	to	determine	whether	a	loan	is	for	“personal,	family	or	
                                                                                            9	

household	 use,”	 14	M.R.S.	 §	 6111(1).	 	 If	 the	 note	 is	 unambiguous,	 the	 court	

interprets	 it	 according	 to	 the	 language	 within	 “the	 four	 corners	 of	 the	

instrument	 without	 resort	 to	 extrinsic	 evidence.”	 	 Am.	 Prot.	 Ins.	 Co.	 v.	 Acadia	

Ins.	Co.,	2003	ME	6,	¶	11,	814	A.2d	989	(quotation	marks	omitted);	see	Coastal	

Ventures	 v.	 Alsham	 Plaza,	 LLC,	 2010	 ME	 63,	 ¶	 26,	 1	 A.3d	 416	 (stating	 that	 “a	

contract	 is	 to	 be	 interpreted	 to	 give	 effect	 to	 the	 intention	 of	 the	 parties	 as	

reflected	 in	 the	 written	 instrument”	 (quotation	 marks	 omitted)).	 	 If	 the	 trial	

court	determines	that	the	note	is	ambiguous,	that	is,	“reasonably	susceptible	

to	 more	 than	 one	 interpretation”	 it	 may	 consider	 extrinsic	 evidence	 of	 the	

parties’	intent	in	executing	it.		Coastal	Ventures,	2010	ME	63,	¶	27,	1	A.3d	416	

(quotation	marks	omitted).			

       [¶11]	 	 We	 review	 de	 novo	 both	 the	 trial	 court’s	 determination	 of	

whether	 a	 note	 is	 ambiguous	 or	 unambiguous,	 and	 its	 interpretation	 of	 an	

unambiguous	note.		Thurston	v.	Galvin,	2014	ME	76,	¶	11,	94	A.3d	16;	Coastal	

Ventures,	 2010	 ME	 63,	 ¶	 30,	 1	 A.3d	 416.	 	 The	 trial	 court’s	 factual	 findings	

regarding	 the	 intent	 of	 the	 parties	 in	 executing	 an	 ambiguous	 note	 are	

reviewed	for	clear	error.		Coastal	Ventures,	2010	ME	63,	¶¶	28,	31,	1	A.3d	416.	

       [¶12]	 	 Here,	 the	 court	 found	 that	 the	 note	 is	 entitled	 “COMMERCIAL	

NOTE”	and	that	it	states	that	it	“evidences	a	loan	for	business	and	commercial	
10	

purposes	 and	 not	 for	 personal,	 household,	 or	 family	 purposes.”	 	 The	 court	

determined,	 however,	 that	 “the	 language	 of	 the	 agreement	 between	 the	

parties	was	ambiguous	with	respect	to	the	existence	and	scope	of	integration”	

as	between	the	note	and	the	mortgage	because	although	the	note	purported	to	

be	 commercial	 in	 nature,	 the	 mortgage	 was	 silent	 as	 to	 any	 commercial	

purpose.		On	this	basis,	the	court	considered	extrinsic	evidence	of	O’Halloran’s	

intended	 use	 of	 the	 loan	 proceeds	 and	 Bordetsky’s	 knowledge	 of	 those	

intended	uses.		

      [¶13]	 	 Pursuant	 to	 the	 third	 requirement	 set	 forth	 in	 section	 6111(1),	

the	court’s	task	was	to	consider	the	nature	of	the	loan.		The	nature	of	the	loan	

is	 explained	 by	 the	 note	 alone,	 and	 the	 note	 unambiguously	 states	 that	 the	

loan	was	“not	for	personal,	household,	or	family	purposes.”		Given	the	lack	of	

any	 ambiguity	 in	 the	 note,	 we	 conclude	 that	 the	 court	 erred	 when	 it	

considered	 extrinsic	 evidence	 of	 the	 parties’	 intent	 in	 executing	 the	 note	 or	

any	other	instrument.		The	loan	was	unambiguously	not	“for	personal,	family	

or	 household	 use”	 within	 the	 meaning	 of	 section	 6111(1),	 and	 therefore	 the	

requirements	 for	 a	 notice	 of	 default	 and	 right	 to	 cure	 contained	 in	 section	

6111	 did	 not	 apply	 to	 Bordetsky’s	 foreclosure	 action	 against	 the	 Trust.	 	 We	

vacate	 the	 court’s	 entry	 of	 a	 judgment	 in	 favor	 of	 the	 Trust	 and	 remand	 the	
                                                                                     11	

matter	 for	 the	 court	 to	 consider	 the	 evidence	 already	 presented	 at	 the	 first	

trial	in	determining	whether	Bordetsky	is	entitled	to	judgment.				

         The	entry	is:	

                            Judgment	 vacated.	 	 Remanded	 for	 further	
                            proceedings	consistent	with	this	opinion.		
	
	     	     	      	       	     	
	
Adam	 J.	 Shub,	 Esq.,	 Preti	 Flaherty	 Beliveau	 &	 Pachios,	 LLP,	 Portland,	 for	
appellant	David	Bordetsky	
	
Mark	 A.	 Kearns,	 Esq.,	 and	 Mark	 L.	 Randall,	 Esq.,	 Portland,	 for	 appellee	 JAK	
Realty	Trust	
	
	
Kennebec	County	Superior	Court	docket	number	RE-2013-62	
FOR	CLERK	REFERENCE	ONLY