Court Opinion

ID: 4545925
Source: CourtListenerOpinion
Date Created: 2020-07-02 15:12:00.796259+00
Date Added: 2024-06-11T12:49:32.865532
License: Public Domain

MAINE SUPREME JUDICIAL COURT                                                  Reporter of Decisions
Decision:    2020 ME 95
Docket:      Aro-19-435
Submitted
  On Briefs: May 12, 2020
Decided:     July 2, 2020

Panel:       MEAD, GORMAN, JABAR, HUMPHREY, and HORTON JJ.

   WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR MFRA
                          TRUST 2014-2

                                                v.

                                          LISA BERRY

HUMPHREY, J.

         [¶1] Wilmington Trust, National Association, as Trustee for MFRA Trust

2014-2 (Wilmington), appeals from a judgment entered by the District Court

(Fort Kent, Soucy, J.) in favor of Lisa Berry following a bench trial on

Wilmington’s complaint for foreclosure. Wilmington argues that the court

erred by excluding evidence of business records showing Berry’s payment

history with various loan servicers, see M.R. Evid. 803(6), and in finding that

Berry did not receive a properly served notice of default and mortgagor’s right

to cure, see 14 M.R.S. § 6111(3) (2018).1 Wilmington also argues that the

   1 As discussed below, see infra II.A.2, the language in 14 M.R.S. § 6111(3) (2018) has since been
repealed and replaced, but this statutory amendment became effective after the events at issue
here. See P.L. 2019, ch. 361, §§ 1-2 (effective Sept. 19, 2019) (codified at 14 M.R.S. § 6111(2-A)
(2020)).
2

court abused its discretion in awarding attorney fees to Berry. See 14 M.R.S.

§ 6101 (2020). We affirm the judgment.

                                       I. BACKGROUND

A.       Foreclosure Complaint and Trial

         [¶2]    On February 16, 2018, Wilmington filed a complaint for

foreclosure, alleging that Berry was in default for failing to make payments

since May 1, 2015, and that she owed $73,508.08.2

         [¶3] On March 20, 2019, the court held a one-day bench trial on

Wilmington’s complaint. At trial, Wilmington sought to admit in evidence

business records purporting to show Berry’s payment history with various

loan servicers, including, in relevant part, Ditech Financial (formerly Green

Tree Servicing) and Fay Servicing, LLC, the current servicer of Berry’s loan.

To support the admission of these records, Wilmington presented testimony

from an employee who worked for these loan servicers and who was familiar

with each entity’s record keeping practices. However, Berry objected to the

admission of the business records because the records also contained a

     2On September 21, 2005, Berry signed a promissory note in the amount of $55,700 for the
purpose of purchasing a residential property in Van Buren and, to secure the note, executed and
delivered a mortgage to Mortgage Electronic Registration Systems, Inc., as the nominee of the
lender. In November 2013, Berry entered into a loan modification agreement, increasing the
outstanding principal to $78,037.07. At trial, the court (Soucy, J.) admitted evidence demonstrating
that Wilmington was the holder of the note and owner of the mortgage, and the parties do not
dispute that evidence.
                                                                              3

reference to a separate loan servicer, “Marix Servicing, LLC.” Although the

records indicated that Marix may have serviced Berry’s loan in December

2016, an employee of Fay Servicing testified that he had no knowledge about

Marix and did not recognize the name.        The court admitted the records

“de bene.”

      [¶4] Additionally, Wilmington attempted to prove that it had properly

mailed to Berry a notice of default and right to cure. Wilmington presented

testimony indicating that the notice had been mailed, and the court admitted

in evidence a copy of the notice, which contained a “First-Class Mail”

designation on the exhibit’s cover page and a “Transaction Report” from

LenderLive, LLC, indicating that a notice was mailed in January 2017. Berry

testified that she had never received the notice and that there were three

other individuals who also received mail at her address.

      [¶5]   Regarding the business records, the court sustained Berry’s

objection made at trial and concluded that, although the witness was

“qualified . . . to lay the foundation necessary to admit the . . . loan payment

history,” the “unexplained reference” to Marix was “fatal to [Wilmington’s]

attempts to lay a proper foundation for the admission of [the records].” The

court found that the reference to Marix “indicate[s] a lack of trustworthiness
4

of the records offered.” Additionally, the court found that Wilmington had

“failed to prove timely receipt of notice of the right to cure” and that Berry had

presented a “credible reason explaining why she may not have received it.”

Because it excluded the evidence of the business records and found that

Wilmington did not prove that it had properly served Berry with the notice of

default and right to cure, the court entered judgment in favor of Berry on

May 14, 2019.

B.       Post-Judgment Motions

         [¶6] On May 28, 2019, Wilmington moved to amend the judgment. See

M.R. Civ. P. 59(e). Wilmington argued that the reference to Marix in the

records did “not indicate a lack of trustworthiness” and, in support, requested

that the court take judicial notice of documents on the Securities and

Exchange Commission’s website.3 Wilmington asserted that these documents

demonstrated that Marix and the other loan servicers at issue were owned by

the same parent corporation and “were effectively the same company.”

Wilmington further argued that the notice of default and right to cure had

complied with the notice requirements of 14 M.R.S. § 6111 and that Berry’s

     3Wilmington provided a hyperlink to the Securities and Exchange Commission’s (SEC) website,
but it did not provide any physical documents to the trial court.
                                                                                               5

receipt of the notice “may be presumed from [the] mailing.” Berry opposed

the motion.

       [¶7] On June 13, 2019, Berry filed a motion seeking an award of

attorney fees because Wilmington “d[id] not prevail.”                    14 M.R.S. § 6101.

Wilmington objected, arguing that an award of attorney fees was unwarranted

because it did not act in “bad faith” during the proceedings.

       [¶8] The court held a hearing on July 17, 2019, and, on September 27,

2019, entered orders on the two pending post-judgment motions. In one

order, the court denied Wilmington’s motion to amend, concluding that “the

unexplained appearance of M[a]rix Servicing in [the business records] raises a

host of doubts about the reliability of the documents.” The court also declined

to take judicial notice of the documents offered by Wilmington, reasoning that

such notice “would not resolve the trustworthiness issues raised by” the

reference to Marix in the records or “the failure of the witness . . . to even

recognize the name [Marix].” In a separate order, the court granted Berry’s

motion for attorney fees, concluding that “from the plain language of the

statute . . . [Berry] need not prove bad faith or extraordinary circumstances.”4

Wilmington timely appealed. See M.R. App. P. 2B(c)(2)(D).

  4  On October 15, 2019, the court entered an amended order on Berry’s motion for attorney fees,
in which the court made spelling and grammatical changes.
6

                               II. DISCUSSION

A.    Evidentiary Issues

      [¶9] Wilmington’s arguments address two of the eight elements of

proof necessary to support a judgment of foreclosure: “the amount due on the

mortgage note, including any reasonable attorney fees and court costs,” and

“evidence of [a] properly served notice of default and mortgagor’s right to

cure in compliance with statutory requirements.”        Bank of Am., N.A. v.

Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700 (quotation marks omitted). We

address each in turn.

      1.    Business Records

      [¶10] Wilmington contends that the court erred in excluding evidence

of business records demonstrating the amount due on Berry’s note, arguing

that it offered sufficient foundational testimony to admit the evidence

pursuant to the business records exception to the hearsay rule. See M.R. Evid.

803(6). Wilmington further argues that any issues regarding the reference to

Marix in the records pertained only to the weight—not the admissibility—of

the evidence, and that the reference to Marix was not a necessary part of

proving its case.
                                                                              7

      [¶11]   We review for clear error “[a] trial court’s determination

regarding whether the necessary factual foundation to admit evidence

pursuant to the business records exception has, or has not, been established,”

M & T Bank v. Plaisted, 2018 ME 121, ¶ 19, 192 A.3d 601 (quotation marks

omitted), and review the court’s “ultimate determination of admissibility for

an abuse of discretion,” Am. Express Bank FSB v. Deering, 2016 ME 117, ¶ 12,

145 A.3d 551 (quotation marks omitted).

      [¶12] The purpose underlying the business records exception to the

hearsay rule is “to allow the consideration of a business record, without

requiring firsthand testimony regarding the recorded facts, by supplying a

witness whose knowledge of business practices for production and retention

of the record is sufficient to ensure the reliability and trustworthiness of the

record.” Avis Rent A Car Sys., LLC v. Burrill, 2018 ME 81, ¶ 28, 187 A.3d 583

(quotation marks omitted). Maine Rule of Evidence 803(6) “dictates both

(1) what foundation must be laid to admit such evidence as an exception to

the rule excluding hearsay evidence, and (2) the type of witness required to

lay that foundation.” Greenleaf, 2014 ME 89, ¶ 25, 96 A.3d 700. In order to lay

the proper foundation, a party must provide, in relevant part, “the testimony
8

of the custodian or another qualified witness,” M.R. Evid. 803(6)(D), to

establish that

        (A) The record was made at or near the time by—or from
        information transmitted by—someone with knowledge;

        (B) The record was kept in the course of a regularly conducted
        activity of a business, organization, occupation, or calling, whether
        or not for profit; [and]

        (C) Making the record was a regular practice of that activity[.]

M.R. Evid. 803(6)(A)-(C); see Greenleaf, 2014 ME 89, ¶ 25, 96 A.3d 700. The

opponent of the record may defeat the proponent’s offer by demonstrating

that “the source of information or the method or circumstances of preparation

indicate a lack of trustworthiness.” M.R. Evid. 803(6)(E).5 “In evaluating

trustworthiness for purposes of Rule 803(6), courts consider factors such as

the existence of any motive or opportunity to create an inaccurate record, any

delays in preparation of the record, the nature of the recorded information,

the systematic checking, regularity and continuity in maintaining the records,

and the business’s reliance on them.” HSBC Mortg. Servs., Inc. v. Murphy, 2011

ME 59, ¶ 11, 19 A.3d 815 (alterations omitted) (quotation marks omitted); see

Plaisted, 2018 ME 121, ¶ 26 n.8, 192 A.3d 601 (stating that a court “could have

    5 See M.R. Evid. 803 Advisory Committee Note - August 2018 (“It is up to the opponent to show
that the source of information or the method or circumstances of preparation of the record indicate
a lack of trustworthiness.”).
                                                                                                 9

excluded [evidence] if the sources of information or other circumstances

indicated a lack of trustworthiness even if it otherwise would have been

admissible”).

       [¶13]     Here, the employee of Fay Servicing testified regarding his

familiarity with the business records of the various loan servicers and was, as

the court found, “qualified . . . to lay the foundation necessary to admit the

screenshots of the loan payment history.”                     After Wilmington laid this

foundation, however, Berry had the opportunity, and burden, to demonstrate

that “the source of information or the method or circumstances of preparation

indicate a lack of trustworthiness.” M.R. Evid. 803(6)(E). Berry pointed to the

reference to Marix in the records, and the court then found that the Marix

reference “indicate[d] a lack of trustworthiness of the records offered.” This

finding was supported by both the reference to Marix in the records and the

testimony of the Fay Servicing employee, who testified that he did not

recognize the name and had no knowledge about Marix.

       [¶14]     Because the court’s finding that the business records were

untrustworthy was supported by the evidence, the trial court did not clearly

err or abuse its discretion when it excluded the business records.6

   6 Although Wilmington has requested on appeal that we take judicial notice of the documents on
the SEC’s website, we decline to do so. Further, to the extent that Wilmington challenges the trial
10

       2.      Notice of Default and Right to Cure

       [¶15]      Wilmington also argues that the court erred in finding that

Wilmington failed to prove timely receipt of the notice of default and right to

cure, asserting that the court gave “undue weight” to Berry’s testimony. We

review a trial court’s factual findings in a foreclosure action for clear error.

See JPMorgan Chase Bank, N.A. v. Lowell, 2017 ME 32, ¶ 12, 156 A.3d 727

(quotation marks omitted). As the party with the burden of proof at trial,

Wilmington “must establish on this appeal that contrary findings were

compelled by the evidence.” Wuestenberg v. Rancourt, 2020 ME 25, ¶ 8, 226

A.3d 227.

       [¶16] One of the essential elements of proof necessary to support a

judgment of foreclosure is “evidence of [a] properly served notice of default

and mortgagor’s right to cure in compliance with statutory requirements.”

Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700 (quotation marks omitted). “[A]

mortgagee may not accelerate maturity of the unpaid balance of [an]

obligation or otherwise enforce [a] mortgage because of a default unless and

court’s ruling in which it declined to take judicial notice of facts in these same documents, we
conclude that the court did not err or abuse its discretion. See M.R. Evid. 201(b); see also Bard v.
Lord, 2010 ME 48, ¶ 8, 997 A.2d 101 (stating the standard of review for rulings on admissibility of
evidence). Here, as the trial court correctly determined, even if it had taken judicial notice of the
facts contained in the documents, these facts “would not resolve the trustworthiness issues raised”
by the reference to Marix nor would they address “the failure of the witness . . . to even recognize
the name [Marix].”
                                                                                                    11

until a notice of default and right to cure has been provided to the mortgagor.”

Bordetsky v. JAK Realty Trust, 2017 ME 42, ¶ 6, 157 A.3d 233 (quotation marks

omitted). The contents of the notice are governed by statute. See 14 M.R.S.

§ 6111(1-A) (2020).

       [¶17] At the time of the events at issue here, section 6111 defined the

procedures for ensuring that the notice was received by the mortgagor,

stating that “[a] mortgagee shall provide notice to a mortgagor . . . by[]

[c]ertified mail, return receipt requested . . . or [o]rdinary first-class mail,

postage prepaid.” 14 M.R.S. § 6111(3)(A)-(B) (2018).7 Pursuant to section

6111(3), when providing notice by certified mail, “the time when the notice is

given to the mortgagor . . . is the date the mortgagor . . . signs the receipt or, if

the notice is undeliverable, the date the post office last attempts to deliver it.”

Id. § 6111(3)(A). Alternatively, when providing notice by ordinary first-class

mail, “the time when the notice is given to the mortgagor . . . is the date when

the mortgagor . . . receives that notice.” Id. § 6111(3)(B) (emphasis added). If

first-class mail is used, “[a] post office department certificate of mailing to the

   7 The language in 14 M.R.S. § 6111(3) (2018) has since been repealed and replaced, but the

effective date of these changes occurred after the events at issue here. See P.L. 2019, ch. 361, §§ 1-2
(effective Sept. 19, 2019) (codified at 14 M.R.S. § 6111(2-A) (2020)). Title 14 M.R.S. § 6111(2-A)
now requires that notice be sent to a mortgagor by both certified mail and ordinary first-class mail.
See id.
12

mortgagor . . . is conclusive proof of receipt on the 3rd calendar day after

mailing.” Id.

      [¶18] Here, Wilmington presented testimonial evidence that the notice

had been mailed and also entered in evidence a copy of both the notice of

default and the “Transaction Report” from LenderLive, LLC, that purported to

show that the notice had been mailed. The copy of the notice showed that the

mailing was designated as “First-Class Mail,” with postage prepaid. Although

“the time when the notice is given to the mortgagor . . . is the date when the

mortgagor . . . receives that notice,” Wilmington did not provide a certificate of

mailing that would have constituted “conclusive proof of receipt.”             Id.

(emphasis added); see Ocean Communities Fed. Credit Union v. Roberge, 2016

ME 118, ¶ 21, 144 A.3d 1178. Without this “conclusive proof,” the court found

that Berry “denied receiving the notice and presented a credible reason

explaining why she may not have received it.” This finding was supported by

the record, including Berry’s testimony that she never received the notice and

that there were three other people who also received mail at the same

address.   See Allen v. Rae, 2019 ME 53, ¶ 9, 206 A.3d 902 (“[B]ecause

determinations of the weight and credibility of testimony and evidence are

squarely in the province of the fact-finder, we will not second-guess the trial
                                                                              13

court’s credibility assessment of conflicting testimony.” (quotation marks

omitted)).

      [¶19] Because Wilmington did not provide “conclusive proof” of receipt

and because the court’s findings are supported by the record, the court did not

clearly err in finding that Wilmington failed to prove that Berry received a

copy of the notice of default and right to cure.          Wilmington has not

demonstrated on appeal that a contrary finding was “compelled by the

evidence.” Wuestenberg, 2020 ME 25, ¶ 8, 226 A.3d 227.

B.    Attorney Fees

      [¶20] Finally, Wilmington argues that the court abused its discretion in

awarding attorney fees to Berry, arguing that it did not file the foreclosure

complaint in bad faith and that 14 M.R.S. § 6101 does not require the court to

award fees to a mortgagor.      Berry counters that the court awarded her

attorney fees because Wilmington did not prevail at trial, which is in

accordance with the plain language of section 6101.

      [¶21] We review a court’s award of attorney fees for an abuse of

discretion, “mindful that the trial court is in the best position to observe the

unique nature and tenor of the litigation as it relates to a request for attorney

fees.” Homeward Residential, Inc. v. Gregor, 2017 ME 128, ¶ 12, 165 A.3d 357
14

(quotation marks omitted). When the “interpretation of a statute is required

in conjunction with the award . . . [of attorney fees], we review the statutory

construction de novo.” Kilroy v. Ne. Sunspaces, Inc., 2007 ME 119, ¶ 6, 930

A.2d 1060.

      [¶22] A court’s authority to award attorney fees may be based on “a

specific statutory authorization.” Sebra v. Wentworth, 2010 ME 21, ¶ 17, 990

A.2d 538. Section 6101 provides, in relevant part, that

      [i]f the mortgagee does not prevail, or upon evidence that the
      action was not brought in good faith, the court may order the
      mortgagee to pay the mortgagor’s reasonable court costs and
      attorney’s fees incurred in defending against the foreclosure or
      any proceeding within the foreclosure action and deny in full or in
      part the award of attorney’s fees and costs to the mortgagee.

14 M.R.S. § 6101. The plain language of section 6101 demonstrates that the

court may award attorney fees to the mortgagor “[i]f the mortgagee does not

prevail, or upon evidence that the action was not brought in good faith.” Id.

(emphasis added). Although the court may also award attorney fees to a

mortgagor “upon evidence that the action was not brought in good faith,” the

use of “or” in the statute indicates that the court was not required to

determine both that the mortgagee did not prevail and that the action was

brought in bad faith. Id.; see Forest Ecology Network v. Land Use Regulation

Comm’n, 2012 ME 36, ¶ 61, 39 A.3d 74 (“The use of the word ‘or’ establishes
                                                                                             15

two alternative criteria.”). Here, it is clear that the court entered judgment in

favor of Berry and, thus, she had “prevail[ed]” in the proceeding.8

Accordingly, the trial court did not abuse its discretion in awarding attorney

fees to Berry.

        The entry is:

                           Judgment affirmed.

Andrew J. Schaefer, Esq., Bendett & McHugh, P.C., Portland, for appellant
Wilmington Trust, National Association

Frank D’Alessandro, Esq., and Deborah Ibonwa, Esq., Maine Equal Justice,
Augusta; Thomas A. Cox, Portland; and Eugene J. McLaughlin, Presque Isle, for
appellee Lisa Berry

Fort Kent District Court docket number RE-2018-1
FOR CLERK REFERENCE ONLY

   8 When there is a dispute regarding which party has “prevailed” in a proceeding, we have

required that the trial court “look at the lawsuit as a whole to determine, as a factual matter,
whether [a party] prevailed.” Homeward Residential, Inc. v. Gregor, 2017 ME 128, ¶ 14, 165 A.3d
357 (citation omitted) (quotation marks omitted). Here, based on the judgment entered in Berry’s
favor, there can be no dispute that she is the prevailing party.