Franklin Savings Bank v. Bordick

STATE OF MAINE BUSINESS & CONSUMER COURT
CUMBERLAND, ss. LOCATION: Portland
DOCKET NO. BCD-CIV-2022-00013

FRANKLIN SAVINGS BANK, )
)
Plaintiff, )
) ORDER DENYING
v. ) DEFENDANTS’ MOTION
) TO DISMISS
MICHAEL T. BORDICK and )
MONICA P. BORDICK, )
)
Defendants. )

INTRODUCTION

In this case, Plaintiff Franklin Savings Bank (“Franklin Savings”) seeks to recover property

subject to a promissory note and security agreement it executed with Michael T. Bordick and

Monica P. Bordick (together, the “Defendants”) due to the Defendants’ alleged default on their

loan payment obligations. Now, pursuant to Rules (12)(b)(6) 1 of the Maine Rules of Civil

Procedure, the Defendants move to dismiss Franklin Savings’ Complaint. Because Franklin

Savings has adequately stated a cause of action, the motion is denied.

STANDARD OF REVIEW

In reviewing a motion to dismiss under Rule 12(b)(6), the court must consider “the facts in

the complaint as if they were admitted.” Bonney v. Stephens Mem. Hosp., 2011 ME 46, ¶ 16, 17

A.3d 123. The complaint is viewed “in the light most favorable to the plaintiff to determine

whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to

relief pursuant to some legal theory.” Id. (quoting Saunders v. Tisher, 2006 ME 94, ¶ 8, 902 A.2d

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Defendants in their Motion to Dismiss and incorporated Memorandum of Law state they are also seeking dismissal
under 12(b)(1) but as no party addresses this basis, the Court disregards it. Even if jurisdiction had been argued, the
parties agreed to transfer to the Business Court and the Court plainly has jurisdiction.

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830). “Dismissal is warranted when it appears beyond a doubt that the plaintiff is not entitled to

relief under any set of facts that he might prove in support of his claim.” Id.

FACTUAL ALLEGATIONS

According to the Complaint, Franklin Savings, a Maine banking corporation with a place

of business in Rangeley, Maine, on December 19, 2014, executed a promissory note (“Note”) and

security agreement (“Agreement”) with the Defendants. Both Defendants are individuals residing

in Towson, Maryland. The Note and Agreement related to a loan from Franklin Savings secured

by a cabin on a leased property in Lower Cupsuptic Township, Maine (the “Camp”). Defendants

borrowed the money to refinance debt owed to Franklin Savings and granted Franklin Savings a

security interest in the Camp which was perfected by a Uniform Commercial Code Financing

Statement. See Compl. Ex. A.

Under the Agreement, Defendants were obligated to make monthly payments to Franklin

Savings until their debt was paid in full. They have defaulted on this obligation by failing to make

timely payments. Franklin Savings notified Defendants of their default and of their right to cure

under 9-A M.R.S. §§ 5-510 & 5-511 but Defendants have failed to cure their default.

Defendants executed a recreational lease agreement (“Lease”) with Six Rivers Limited

Partnership, as lessor, dated May 1, 2019, which the Defendants assigned to Franklin Savings on

or about that same day. The Lease contains language providing that “title to all buildings on or

hereafter erected or built on the leased premises shall be and remain personal property of the

[Defendants].” 2

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This language is not referenced in the Complaint but, because (i) both parties refer to this language in their briefs
and (ii) documents central to a plaintiff’s claim are properly considered on a motion to dismiss, the Court takes it as
an established fact for the purposes of the Motion to Dismiss. See Moody v. State Liquor & Lottery Comm’n, 2004
ME 20, ¶ 11, 843 A.2d 43.

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Under the Agreement and the Lease, Franklin Savings believes it has a right to possession

of the Camp. Franklin Savings believes Defendants are in possession of the Camp at its initial

location in Lower Cupsuptic Township, Maine and has demanded they surrender it, but Defendants

have failed and/or refused to comply.

DISCUSSION

Franklin Savings seeks to possess the Camp under 14 M.R.S. § 7071, which provides that

“[i]f 2 or more persons claim a right in, title to or possession of personal property, a claimant may

bring a civil action in District Court to resolve a dispute among the claimants.” It alleges the Note,

Agreement, and Lease grants it a right to possession via a security interest. Defendants first

challenge as inadequate Franklin Savings’ allegation that it was assigned the Lease. Defendants

also deny the existence of this security interest on two bases: (i) the Camp is not personal property

and thus not subject to § 7071, and (ii) the Maine Uniform Commercial Code prohibits security

interests in materials incorporated in an improvement on land.

1. Franklin Savings Adequately Alleged the Assignment of the Lease

To adequately allege the assignment of a lease in the context of a motion to dismiss, a party

need only state that a lease exists and that it was assigned. Thurston v. Cont’l Casualty Co., 567

A.2d 922, 925 (Me. 1989). These are facts taken as true, not legal conclusions. The enforceability

of the assignment is a matter to be determined at trial or by dispositive motion. Franklin Savings

has adequately alleged it was assigned the Lease by Six Rivers Limited Partnership.

2. The Camp is Personal Property

Defendants assert that 14 M.R.S. § 7071 is inapplicable to the Camp because it explicitly

applies to “personal property” and any interest Franklin Savings may have is in real estate.

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However, 33 M.R.S. § 455 provides that “a building erected with the consent of the landowner by

one not the owner of the land upon which it is erected [may] be and remain personal property” by

the written agreement of the landowner. This is well established law which by its plain meaning

and interpretation by courts over the years recognizes that an entire structure can be considered

personal property. See, e.g., Sutton v. Frost, 432 A.2d 1311, 1313 (Me. 1981) (holding that “a

building of a permanent character can be held by another as personal property” via agreement with

the landowner); Peaks v. Hutchinson, 53 A. 38, 39-40 (Me. 1902) (holding that “a building erected

by one man on the land of another, by his permission, remains the personal property of him who

erects it”). The Law Court recently clarified in Atlantic Home Solutions, Inc. v. Quang Pham that

the parties’ agreement is relevant (although not determinative) to the determination of whether the

personalty has become part of the realty upon which it rests. 2022 ME 6, ¶ 11, 267 A.3d 1106.

Other factors include the nature of the structure’s physical attachment to the land and the party’s

relation to and use of the structure also being relevant. Id.

Here, the Lease expressly provides that “title to all buildings on or hereafter erected or built

on the leased premises shall be and remain personal property of the [Defendants].” This agreement

is evidence that the Camp is personalty, not realty, sufficient to survive the instant motion. See id.

Moreover, the Defendants were certainly on actual notice of this language, despite the fact it was

not recorded, because it was in the Lease they agreed to and signed. Six Rivers and Defendants

agreed in no uncertain terms to treat the Camp as personal property, not real estate, and this Court

will apply the law as such on the instant motion. That the Lease was assigned to Franklin Savings

has no bearing on the treatment of the Camp as personalty.

3. The Maine UCC Exception Does Not Apply

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Defendants believe that Franklin Savings is barred from taking a security interest in the

Camp under 11 M.R.S. § 9-1334(1 ), which provides that a "security interest does not exist under

this Article in ordinary building materials incorporated into an improvement on land." First,

because the Camp is treated as personalty, § 9-1334 is inapplicable. Second, even if that were not

the case, the reference to § 9-1334 is inapposite. The purpose of§ 9-1334 is to prevent creditors

from claiming security interests on materials such as lumber, concrete, and brick after said

components have been incorporated into a complete structure. It does nothing to bar a security

interest on that structure. Franklin Savings is not seeking to possess the two-by-fours and shingles

of the Camp, it is seeking to possess the Camp as a whole.

CONCLUSION

Based on the foregoing, the entry will be: Defendants Michael T. Bordick and Monica P.

Bordick's Motion to Dismiss is DENIED.

SO ORDERED.

The Clerk is requested to enter this Order on the Docket, incorporating it by reference

pursuant to M.R. Civ. P. 79(a).

Date: 05/27/2022
Michael A. Duddy, Judge
Business & Consumer Court

Entered on the docket: 05/27/2022

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