WILMINGTON TRUST NATIONAL ASSOCIATION NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE FOR MFRA TRUST 2015-1 v. HOWE et al

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
WILMINGTON TRUST,
NATIONAL ASSOCIATION NOT
IN ITS INDIVIDUAL CAPACITY,
BUT SOLELY AS TRUSTEE FOR
MFRA TRUST 2015-1,
Plaintiff,
v.
HENRY W. HOWE IV and
MELANIE B. HOWE,
Defendants.
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Docket No. 2:21-cv-00278-NT
ORDER ON PLAINTIFF’S MOTION TO STAY
Before me is the Plaintiff’s motion to stay this matter pending a decision in a
Maine state court appeal (ECF No. 36). For the reasons set forth below, the Plaintiff’s
motion is DENIED.
BACKGROUND
On September 30, 2021, Plaintiff Wilmington Trust National Association Not
In 	Its 	Individual 	Capacity, 	But 	Solely 	As 	Trustee 	For 	Wilmington 	2015-1
(“Wilmington”) filed its complaint, alleging claims for breach of contract, quantum
meruit, and unjust enrichment against Defendants Henry W. Howe IV and Melanie
B. Howe related to a loan taken out by the two Defendants. Compl. (ECF No. 1).
Specifically, Wilmington alleges that, in 2007, when the Howes bought their property
in Hollis, Maine, they executed a promissory note for $208,000, which was later
modified. Compl. ¶¶ 6–8. According to Wilmington, it is now the lawful holder and
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owner of the note, and the Howes have breached the terms of the note and owe more
than $352,000 on it. Compl. ¶¶ 9–11, 16–20. Although the note was originally secured
by the Howes’ Hollis property, Wilmington is not seeking foreclosure in this action
and instead asserts (1) a claim for breach of the note, (2) a claim for breach of contract,
money had and received, (3) a claim for quantum meruit, and (4) a claim for unjust
enrichment, based on the Howes’ alleged breaches of the note and failure to repay the
loan obligation. Compl. ¶¶ 12, 14–42.
Defendant Henry Howe defaulted. Order (ECF No. 19). Defendant Melanie
Howe, 	however, 	filed 	an 	answer 	and 	affirmative 	defenses, 	and 	she 	asserted
counterclaims against Wilmington and Fay Servicing, LLC (“Fay”). Melanie Howe’s
Answer & Countercls. (“Countercls.”) (ECF No. 8). According to Ms. Howe, when
she and Henry Howe borrowed the $208,000, they executed a promissory note and
mortgage to Challenge Financial Investor’s Corp. (“Challenge”). Countercls. ¶ 17. In
2017, MTGLQ Investors LP believed it was holding the note, and it filed an action in
state court against Challenge, naming the Howes as parties in interest and seeking
a declaratory judgment that, as holder of the note, MTGLQ Investors LP had
standing to foreclose to enforce the note (“Prior Action”). Countercls. ¶¶ 19–21. The
Prior Action apparently did not include the claims asserted here. Countercls. ¶ 22.1
1 	Presumably the state court action was initiated to try to address a “Greenleaf issue” because
the Howes’ mortgage gave Mortgage Electronic Registration Systems, Inc. the right to record, but
under Bank of Am., N.A. v. Greenleaf, 2014 ME 89, 96 A.3d 700, the other rights under the mortgage,
including the right to foreclose, remained with Challenge. Melanie Howe’s Answer & Countercls.
(“Countercls.”) ¶¶ 18–19 (ECF No. 8).
A few months into the Prior Action, Wilmington was substituted as the plaintiff, see
Countercls. Ex. C (ECF No. 8-3), and eventually the Prior Action was dismissed with prejudice,
following Beal Bank USA v. New Century Mortg. Corp., 2019 ME 150, 217 A.3d 731. Countercls. ¶¶ 24–
27, 30; see Countercls. Ex. B (ECF No. 8-2). Wilmington filed a motion to amend the order dismissing
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Ms. Howe alleges that, after having chosen to “split its claims” by not bringing
any collection claims in the Prior Action, and then losing on the declaratory judgment
claims asserted in the Prior Action, Wilmington continued to try to collect on the note.
Countercls. ¶¶ 32–40. According to Ms. Howe, the collection attempts include: (a)
Wilmington filing this federal action; (b) the loan servicer, Fay, sending written
correspondence to Ms. Howe, representing that Wilmington and Fay had a right to
collect and threatening foreclosure; (c) Fay repeatedly calling Ms. Howe in an attempt
to collect on the loan; and (d) an agent working for either Wilmington or Fay sending
agents to Ms. Howe’s house to inspect and take photographs of the property.
Countercls. ¶¶ 40–51. Ms. Howe alleges that both Wilmington and Fay violated the
Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., and that Fay violated a
Maine law, 14 M.R.S. § 6113, that requires mortgage servicers to act in good faith in
servicing a mortgage-secured debt. Countercls. ¶¶ 53–71.
The Plaintiff now requests that I stay the case until after the Maine Supreme
Judicial Court, sitting as the Law Court, issues a decision in a pending state appeal,
J.P. Morgan Acquisition Corp. v. Camille J. Moulton, Docket No. Oxf-21-412. Mot. to
Stay Pending Appeal (“Mot.”) 1–2 (ECF No. 36). Wilmington argues that resolution
of the issues before the Law Court in Moulton “will directly impact the outcome of the
the Prior Action with prejudice, seeking to have the order modified to “specify that the Dismissal with
Prejudice only precludes a future action brought by Wilmington . . . , or a successor-in-interest, for the
claims advanced in this action,” but the state court denied the motion. Countercls. Ex. A (ECF No. 8-
1); Countercls. ¶¶ 31, 37. Wilmington did not appeal that decision. Countercls. ¶¶ 34, 38.
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instant matter.” Mot. 2. Ms. Howe opposes the stay. Opp’n to Pl.’s Mot. to Stay
Pending Appeal (“Opp’n”) (ECF No. 38).
LEGAL STANDARD
“The power to stay proceedings is incidental to the power inherent in every
court to control the disposition of the causes on its docket with economy of time and
effort for itself, for counsel, and for litigants.” Pan Am Sys., Inc. v. Hardenbergh, No.
2:11-cv-00339-NT, 2012 WL 4855205, at *1 (D. Me. Oct. 12, 2012) (quoting Landis v.
N. Am. Co., 299 U.S. 248, 254 (1936)). But “[a] stay is an intrusion into the ordinary
processes of administration and judicial review.” Nken v. Holder, 556 U.S. 418, 427
(2009) (internal quotation marks omitted). Therefore, “stays cannot be cavalierly
dispensed.” Marquis v. F.D.I.C., 965 F.2d 1148, 1155 (1st Cir. 1992).
In determining whether to grant a stay request, courts consider the following
factors: “(1) potential prejudice to the non-moving party, (2) hardship and inequity to
the 	moving 	party 	without 	a 	stay, 	and 	(3) 	judicial 	economy.” Kourembanas 	v.
InterCoast Colls., No. 2:17-cv-00331-JAW, 2018 WL 4087999, at *2 (D. Me. Aug. 27,
2018) 	(internal 	quotation 	marks 	omitted). 	“The 	movant 	bears 	the 	burden 	of
demonstrating that a stay is appropriate.” Id. (internal quotation marks omitted).
DISCUSSION
To meet its burden of showing that a stay is appropriate, the Plaintiff copied
and pasted the questions posed by the Law Court in its invitation for amicus briefing
in Moulton. Among the questions are: (1) whether the Law Court should “reconsider
its existing precedent that a foreclosure judgment in favor of the mortgagor . . .
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renders the note and mortgage unenforceable because a second foreclosure action is
barred by principles of res judicata?” and (2) “If the lender is barred from pursuing a
second foreclosure action under principles of res judicata, does this inability render
the note and mortgage unenforceable such that the lender may pursue alternative
claims including, but not limited to, an unjust enrichment claim against the borrower
. . . ?” 	Mot. 	2. 	Wilmington 	claims 	that 	“the 	outcome 	of 	the 	Moulton 	decision,
particularly if the Law Court overturns its prior decisions, would certainly foreclose
Howe’s arguments that the instant action is precluded.” Mot. 2.
Ms. Howe counters that it is unlikely that the forthcoming Moulton decision
will have an effect on this litigation because “the flavor of res judicata at issue” in
Moulton differs from this case. Opp’n 3. Ms. Howe points out that because this matter
does not involve a foreclosure claim; the res judicata question at issue here is whether
the Plaintiff could have brought its current claims in the Prior Action, and whether
the Prior Action, which was for a declaratory judgment and was dismissed with
prejudice, bars the current action. Opp’n 3. Further, Ms. Howe argues that nothing
the 	Law 	Court 	decides 	in 	Moulton 	will affect 	Ms. 	Howe’s 	counterclaims 	that
Wilmington and Fay violated the Fair Debt Collection Practices Act and Maine’s law
requiring mortgage servicers like Fay to act in good faith. Opp’n 3–4.
I find that the Plaintiff has not met its burden of demonstrating that a stay is
warranted pending an outcome in Moulton. As to the first factor, granting the stay
would prevent Ms. Howe from proceeding with her counterclaims based on the
collection practices employed by Wilmington and Fay, which Wilmington seems to
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acknowledge do not play any role in the Moulton case. See Pl./Counter-Def.’s Reply to
Opp’n (“Reply”) 2 (ECF No. 40). In addition, Ms. Howe’s Answer and Counterclaims
outline the alleged physical and emotional distress that Wilmington’s and Fay’s
collection efforts have caused Ms. Howe and her family. Countercls. ¶¶ 14–16, 52.
Postponing resolution in this case would prolong this alleged damage to her mental
health and well-being.
Wilmington claims that “factors one and two are both met” because “the delay
would allow the Defendant to remain in the property, whereas the Plaintiff is paying
taxes and insurance and Howe is not paying the loan obligation.” Reply 1–2. I fail to
see how factor two is met under this logic. Imposing a stay would delay resolution
here and extend the period of time that Wilmington must pay taxes and insurance
costs on the property. Thus, Wilmington’s harm is actually aligned with Ms. Howe’s—
the longer this case (brought by Wilmington in the first place) drags on, the more
Wilmington is out of pocket for these carrying costs. Wilmington has not put forward
any hardship or inequity that would befall it absent a stay.
Finally, 	judicial 	economy 	weighs 	in 	favor 	of 	denying 	the 	stay 	request.
Wilmington maintains that a decision in Moulton should issue “relatively soon” and
therefore conducting discovery in this matter “in such a fluid environment” would be
a waste of judicial resources and the parties’ time and money. Reply 2. There are a
few reasons I am unpersuaded by this argument. First, I have no way to predict when
the Law Court will issue its Moulton opinion so it is impossible to know if it will come
out in the near future as Wilmington suggests. See Nken, 556 U.S. at 421 (“It takes
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time to decide a case on appeal. Sometimes a little; sometimes a lot.”). Second, at this
stage in the federal litigation, there is little by way of judicial resources that will be
wasted. I have already ruled on the parties’ pleadings-related motions. See Order on
Def.’s Mot. for Leave to Add Party to Countercls. & Pl.’s Mot. to Strike (ECF No. 23).
A scheduling order will issue in this case as soon as Fay files its answer, and the
parties will have the standard months-long period to conduct discovery. Likely
nothing will require the Court’s time unless and until a party notifies me of its intent
to file a motion for summary judgment. Further, I doubt that the scope of discovery
will change much based on Moulton because presumably the majority of res judicata-
related documents—such as state court filings—are already known to the parties
given that they were also involved in the Prior Action. So the additional time and
money expended by the parties if this case proceeds while Moulton is undecided is
negligible.
That leads to the question at the heart of the parties’ briefing—how much the
outcome of the Moulton case could affect this litigation. The Law Court’s summary of
the Moulton appeal explains the case as follows:
J.P. Morgan Acquisition Corp. filed a foreclosure action against Camille
J. Moulton. It later moved to dismiss the action without prejudice. The
trial court denied J.P. Morgan’s motion to dismiss the action and
granted a summary judgment to Camille Moulton, determining that
there was no dispute of material fact as to J.P. Morgan’s failure to
properly notify Moulton of her default and opportunity to cure the
default. The trial court also declared that Moulton owned the title to the
property free and clear of the mortgage.
J.P. Morgan appeals, arguing that (1) there is a dispute of material fact
regarding the validity of the notice of default and right to cure; (2) the
trial court erred by declaring that Moulton owns the property free and
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clear of the mortgage because there was no claim, counterclaim, or other
action requesting that relief; (3) the trial court erred in determining that
J.P. 	Morgan 	lacked 	standing 	to 	foreclose 	without 	permitting 	J.P.
Morgan to produce evidence to prove its standing; and (4) the trial court
was compelled to grant its motion to dismiss without prejudice.
The Law Court invited amicus briefs and supplemental briefing of the
parties on whether the Court should reconsider existing precedent that
holds that a foreclosure judgment in favor of a mortgagor bars a second
foreclosure action and entitles the mortgagor to a discharge of the
mortgage and title to the mortgaged property.
Maine Supreme Judicial Court, Oral Arguments (Tuesday, Nov. 1, 2022, at the
Penobscot Judicial Center, Bangor), Summary of J.P. Morgan Acquisition Corp. v.
Camille 	J. 	Moulton, 	Docket. 	No. 	Oxf-21-412, 	available 	at 	https://www.courts.
maine.gov/courts/sjc/arguments-stream.html 	(last 	accessed 	Dec. 	7, 	2022). 	The
“existing precedent” mentioned are two 2017 Law Court cases holding that, when a
lender brings a foreclosure action against a mortgagor which is dismissed with
prejudice, res judicata bars certain future enforcement actions by the lender. See Fed.
Nat’l Mortg. Ass’n v. Deschaine, 2017 ME 190, 170 A.3d 230, as revised (Dec. 7, 2017)
(holding that lender was precluded from seeking to recover the underlying debt on
the note and borrowers were entitled to declaration that they held title to their
property unencumbered by the mortgage); Pushard v. Bank of Am., N.A., 2017 ME
230, 175 A.3d 103 (holding that borrowers were entitled to declaration that the note
and mortgage were unenforceable and the borrowers held title to their property
unencumbered by the mortgage).
The case before me is not a second foreclosure action. In fact, there was never
a first foreclosure action relating to the note in question. This case involves whether
the note-related and equitable claims brought here are barred because they could
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have been brought in the Prior Action and weren’t and because the Prior Action for
declaratory judgment on the note was dismissed. Whether the Moulton decision will
directly impact the issues in this case is unclear. See Kourembanas, 2018 WL
4087999, at *3 (denying motion for indefinite stay to wait for a different court “to rule
on a similar, though not identical, issue in another case”). It is true that one of the
questions the Law Court invited supplemental briefing on was whether, if a lender is
barred 	from 	pursuing 	a 	second 	foreclosure 	action, 	that 	rendered 	the 	note
“unenforceable such that the lender may pursue alternative claims” such as an unjust
enrichment claim. See Mot. 2. But that hypothetical still is not identical to the
scenario at issue here. And even if the Law Court does issue an opinion that changes
Maine law in a way that might affect this litigation, the case is at an early enough
stage that the parties and the Court should be able to incorporate the changed law
by the time any dispositive motions must be filed. Therefore, it is in the interests of
judicial economy to allow this case to proceed through discovery while the Law Court
decides the Moulton appeal.
CONCLUSION
For the reasons stated above, the Court DENIES the Plaintiff’s motion to stay
pending appeal (ECF No. 38).
SO ORDERED.
/s/ Nancy Torresen
United States District Judge
Dated this 15th day of December, 2022.
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