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Ocwen Fed. Bank. v. Gile
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2001 ME 120
Docket:	Yor-00-625	
on Briefs:	June 25, 2001
Decided:	July 25, 2001





	[¶1]  Ocwen Federal Bank, FSB appeals from the judgment entered
in the District Court (York, Wheeler, J.) denying its motion for summary
judgment, and granting Anne Gile's motion for summary judgment.  On
appeal, Ocwen contends that the notice provision of 36 M.R.S.A. § 942
(1990 & Supp. 2000),{2} establishing a thirty-day period for notice of a tax
lien, is not subject to 36 M.R.S.A. § 153(2) (1990),{3} which states that a time
limit shall be extended if the last day of the time to take an action is a
Saturday, Sunday, or legal holiday.  Ocwen claims that the Town of Eliot
failed to timely record the tax lien certificate during the ten-day period
following the thirty-day notice period and that, as a result, Ocwen and Gile
maintain a continuing interest in the property.  Because the Town is a
necessary party to determination of its ownership interest in the property,
we vacate and remand to join the Town as a party so that it may participate
fully in the trial court proceedings.
	[¶2]  On June 29, 1996, Anne Gile signed a note to evidence her
debt to Ford Consumer Finance Company, Inc.  The note was secured by a
mortgage on Gile's property located in Eliot.  Pursuant to the mortgage, Gile
was required to pay all taxes, liens, assessments, obligations, and other
charges on the property, and her failure to do so entitled the mortgagee to
immediate payment in full of the note balance. 
	[¶3]  Gile failed to pay taxes on the property.  To secure payment of
the 1997 taxes, on June 26, 1998, the Town of Eliot sent Gile by certified
mail a thirty-day notice and demand pursuant to 36 M.R.S.A. § 942,
requesting payment of taxes.  On August 6, 1998, because no payment of the
1997 taxes had been received, the Town filed a tax lien certificate on the
property pursuant to 36 M.R.S.A. § 943 (1990 & Supp. 2000){4} in the
amount of $1379, with interest of $99.98 and costs of $42.85.  This is the
tax lien at issue in this case.{5} 
	[¶4]  On October 14, 1999, Associates Home Equity Services, Inc.,
formerly Ford Consumer Finance Company, Inc., filed a complaint in the
District Court for foreclosure on the Gile property.  On October 22, 1999, a
clerk's certificate was recorded in the York County Registry of Deeds,
stating that Associates had filed a complaint against Gile to commence
foreclosure proceedings on the property.  On March 7, 2000, Associates
assigned its interest in the mortgage on the Gile property to Ocwen.{6} 
Citizens Bank New Hampshire and Household Finance Corporation II also
held mortgage interests of record on the property (dated February 20,
1997, and May 23, 1998, respectively). 
	[¶5]  None of the mortgagees attempted to redeem the Gile property
by paying the outstanding taxes within eighteen months of the date of the
filing of the tax lien certificate, as provided by 36 M.R.S.A. § 943.  In
December 1999, the Town served by certified mail, return receipt
requested, notices of the impending February 8, 2000, automatic
foreclosure  of the lien pursuant to section 943.{7}  The notices were mailed
to mortgagees of record of that date:  Gile, Citizens, Household, Industry
Mortgage, and Associate's predecessor, Ford.  In early March 2000, the
Town learned that Associates was a party holding a mortgage interest in the
Gile property, and that Ocwen was the successor in interest.  On March 8,
2000, the Town notified Ocwen and Associates of the impending automatic
foreclosure of the lien securing payment of the 1997 taxes.  The Town
indicated in its letter that the last day the Town could accept payment was
thirty days after the date of the notice, or by April 7, 2000.  
	[¶6]  On March 29, 2000, Ocwen requested the payout amount for
the lien.  The Town responded the same day.  On April 8, 2000, Ocwen
mailed payment for past due taxes, fees and interest to the Town.  The
payment was received on April 10, and refused as untimely.  On April 12,
2000, the Town returned the check to Ocwen, stating the tax lien had
foreclosed on April 7, leaving the Town as the owner of the Gile property.{8} 
		[¶7]  On March 22, 2000, Ocwen, as successor in interest, filed a
motion for default and summary judgment.  Ocwen claimed that the Town
failed to file the lien certificate within the ten-day period following
expiration of the thirty-day notice period pursuant to 36 M.R.S.A. § 942.  
Gile filed an objection and a motion for summary judgment to dismiss the
claim as moot, claiming that because the thirtieth day of the notice period
was Sunday, July 26, 1998, the period was extended under 36 M.R.S.A.
§ 153(2) until the next day, Monday, July 27, and that the ten­p;day lien filing
period therefore ended on August 6, 1998, not August 5.  Gile claimed that
the Town's certificate was properly recorded, and the tax lien securing
payment of the 1997 taxes had foreclosed, divesting Ocwen or any other
mortgagee of any interests in the Gile property.  
	[¶8]  Although aware of the pending action, the Town did not seek
to join the action, and no party sought to add the Town as a party.	
	[¶9]  On June 14, 2000, the District Court held a hearing on the
cross motions for summary judgment.{9}  Shortly after the hearing, counsel
for the Town submitted a letter to the court, objecting to the court's
consideration of the Town's interests under the tax lien without the Town's
having been made a party.  However, the Town made no effort to invoke
M.R. Civ. P. 18, 19, or 24 to join the action.  
	[¶10]  On November 15, 2000, the court denied Ocwen's motion for
summary judgment, and granted Gile's motion for summary judgment.  The
court determined that 36 M.R.S.A. § 153(2) applied to extend the thirty­p;day
notice and demand period under 36 M.R.S.A. § 942, stating that:
Under 36 M.R.S.A. § 942, the payment of the taxes within 30
days to avoid a tax lien mortgage is the performance of an act
required by Title 36.  Thus, under section 153(2) the 30-day
period for paying the taxes was automatically extended to
Monday, July 27, 1998.  The taxpayer had until July 27, 1998 to
pay the taxes and avoid the Town's filing of the lien in the York
County Registry of Deeds.  The taxpayer did not make the
required payment of taxes and the Town filed its tax lien on
August 6, 1998, within the 10-day period for the Town to file
the tax lien under 36 M.R.S.A. § 942.
The court found that because notice was proper to record holders, and the
taxes, interest and charges secured by the tax lien mortgage were not timely
paid, the tax lien mortgage had been foreclosed.  The court entered
summary judgment for Gile.  Ocwen then brought the present appeal
directly to this Court as authorized by statute for an appeal of a foreclosure
action.  14 M.R.S.A. § 1901(2)(A) (Supp. 2000).
	[¶11]  We are hesitant to act upon requests to decide issues when
the interests of the parties to the appeal are not apparent and an important
party is not before the Court.  Prudent review suggests that there is more to
this appeal than meets the eye-or at least the eye as informed by the
available record.  Gile does not contest Ocwen's claims in its foreclosure
action.  Thus, it appears that, as between Ocwen and Gile, Ocwen should be
entitled to a judgment of foreclosure on whatever interest, if any, that Gile
may possess in the property, together with a determination of the sums due
and owing to Ocwen so that the collection process on the indisputably
defaulted note may proceed. 
	[¶12]  Gile has retained counsel and actively participated in the
litigation, contending that as a result of her default in payment of taxes, she
has divested herself and Ocwen of any right, title, and interest in the subject
property.  The Town, although aware of the action and asserting ownership
of the subject property, has not joined in the action, or been joined by any
other party.  By these steps, the action appears to have been transformed
from a foreclosure action between Ocwen and Gile to a quiet title action
between Ocwen and the Town, with Gile actively participating while
asserting lack of right, title, and interest.  In the present posture of the
action, it may not be possible to accord complete legal and equitable relief
among the Town, Gile, and Ocwen.  Among other matters, the nature of
Gile's remaining interest in the property, and thus the sums that may be due
and owing to Ocwen cannot be finally determined until the status of the
Town's interest in the property is resolved.
	[¶13]  By letter to the District Court, but not by brief to this Court,
the Town questioned the District Court's authority to decide the validity of
the tax foreclosure without the Town as a party.  The Town's participation in
this appeal by filing a brief is insufficient to confer party status before us,
when the Town was not properly joined as a party in the District Court.  See
M.R. App. P. 9(e); M.R. Civ. P. 75A(f) (detailing procedure, not followed in
this case, for nonparty participants to file amicus curiae briefs on appeal). 
See also Cushing v. Cohen, 420 A.2d 919, 927 n.7 (Me. 1980) ("[a]ddition of
the parties by ex parte amendment of the pleadings . . . is disfavored and a
court order under the more specific provision of Rule 21 is preferred"). 
	[¶14]  M.R. Civ. P. 19(a){10} requires joinder of all available persons
who have an interest in the litigation so that any judgment will "effectively
and completely adjudicate the dispute."  Centamore v. Comm'r, Dept. of
Human Servs., 634 A.2d 950, 951 (Me. 1993); Peoples Heritage Bank v.
Grover, 609 A.2d 715, 716 (Me. 1992).  This requirement protects unjoined
but interested parties by assuring that their interests will not be prejudiced
without their participation and it protects active parties by assuring that
issues will not have to be relitigated.  Centamore, 634 A.2d at 951.
	[¶15]  Town participation in this case is particularly important
where the Town not only had a recorded tax lien, but additionally is
asserting an ownership interest which matured after the filing and
recording of the complaint in the foreclosure action by the first priority
mortgagee.  As such, the Town is a party in interest pursuant to 14 M.R.S.A.
§ 6321 (Supp. 2000).{11}  The Town's asserted later maturing interest risks
ambiguity under that portion of section 6321 addressing interests
unrecorded at time of filing, unless the Town becomes a party.  Thus,
section 6321 (Supp. 2000) cautions:  
Any other party having a claim to the real estate whose claim
is not recorded in the registry of deeds as of the time of
recording of the copy of the complaint or the clerk's
certificate need not be joined in the foreclosure action, and
any such party has no claim against the real estate after
completion of the foreclosure sale; provided that any such
party may move to intervene in the action for the purpose of
being added as a party in interest at any time prior to the
entry of judgment.
	[¶16]  Neither the trial court nor this Court is precluded from
raising the issue of joinder sua sponte.  See Centamore, 634 A.2d at 952. 
Because we may take notice of the absence of a necessary party on our own
accord, we need not address whether parties raised the joinder issue
themselves.  See Efstathiou v. Payeur, 456 A.2d 891, 892 n.2 (Me. 1983).
	[¶17]  The Town stated in its letter to the trial court that, in
accordance with 14 M.R.S.A. § 6321 (Supp. 2000),{12} it was not named
either as a defendant or party in interest because it had a superior priority
to the foreclosing mortgagee in the matter.  The Town is correct that
parties with competing or superior mortgage interests are not required to
be joined in foreclosure actions initiated by parties with lesser priority
interests.  See, e.g., Casco N. Bank v. Estate of Grosse, 657 A.2d 778, 781
(Me. 1995) (in which we determined that parties in interest pursuant to
section 6321 were not bound by a defendant's failure to answer a complaint
in a foreclosure action, and were "entitled to independently litigate the
validity of the [plaintiff's] mortgage . . . to determine its relative priority"). 
However, the language relied on by the Town only applies to actions by a
mortgagee "other than one of the first priority."  When the action was
commenced, Ocwen held the "mortgage of first priority" and retains that
status if Ocwen's view of the law is correct.  Further, this is not a case
involving priority of existing mortgages and liens; the issue here is whether
the automatic statutory foreclosure of the property tax lien properly took
place to bar Ocwen's claim and quiet title in the Town.
	[¶18]  The automatic foreclosure of a tax lien under section 943,
upon the failure to redeem, divests an owner of her equity of redemption. 
See City of Auburn v. Mandarelli, 320 A.2d 22, 30 (Me. 1974).  We have
stated that:
after the filing of the tax lien certificate and notice properly
given thereon and the passage of eighteen months' time, during
which the taxes remain unpaid, complete record title to the
property is placed in the municipality.  The former owner's
right of redemption and in fact his title are extinguished.
Morissette v. Connors, 350 A.2d 332, 333 (Me. 1976).{13}  In addition,
"[u]nder Maine law, a mortgage on real property is a conditional conveyance
with legal title vested in the mortgagee."  Duprey v. Eagle Lake Water and
Sewer Dist., 615 A.2d 600, 602 (Me. 1992).  "The mortgagor retains only
the right to possess the premises and the equity right of redemption."  Id.
(citing Martel v. Bearce, 311 A.2d 540, 543 (Me. 1973)).  Because tax lien
foreclosures vest full and unencumbered title in the municipality upon the
failure to redeem, pursuant to section 943, the mortgagees' interests appear
to be divested as well.{14}	
	[¶19]  Gile's and/or Ocwen's interest, therefore, would have been
lost upon the automatic statutory foreclosure by the Town, if the procedure
was performed in accordance with the statutory requirements.  As a result,
the Town's establishing title to the Gile property would be dispositive of
Ocwen's interest.  Because Gile is defending on the ground that the Town
foreclosed on the property, to the exclusion of Ocwen, the relief the court
awards could not "effectively and completely adjudicate the dispute" if it did
not bind the Town. 
	[¶20]  Towns are subject to actions regarding the adequacy of
procedures followed in tax lien foreclosures, see, e.g., Hamm v. Town of
Medway, 644 A.2d 1388, 1389 (Me. 1994), and the Town can be served
with process.  The Town has a clear interest in litigating the validity of its
title, which would not be completely adjudicated in its absence.  See, e.g.,
Efstathiou, 456 A.2d at 893.  
	[¶21]  If joinder of a directly interested party is possible, then
joinder is mandatory.  See Larrabee v. Town of Knox, 2000 ME 15, ¶ 10,
744 A.2d 544, 547; Centamore, 634 A.2d at 951; Sargent v. Coolidge, 433
A.2d 738, 743 (Me. 1981).  Consequently, the Town should have joined, or
been joined, as a necessary party to the action by the District Court.  
	The entry is:
Judgment vacated.  Remanded to the
District Court to join the Town of Eliot as
a necessary party and reconsider all
issues with all parties being given full
opportunity to participate.

Attorney for plaintiff: Paul E. Peck, Esq. Scott E. Herrick, Esq. Drummond & Drummond, LLP One Monument Way Portland, ME 04101 Attorneys for appellees: Patrick S. Bedard, Esq. P O Box 366 Eliot, ME 03903 (for Anne Gile) Joan M. Fortin, Esq. Robert J. Crawford, Esq. Bernstein, Shur, Sawyer & Nelson, P.A. P O Box 9729 Portland, ME 04104-5029 (for Town of Eliot)
FOOTNOTES******************************** {1} . Citizens Bank New Hampshire and Household Finance Corporation II were both joined as parties in interest due to their mortgage interests in the property at issue. The Town of Eliot was not joined as a party in interest in the underlying foreclosure action but filed a brief on appeal. {2} . Section 942 states in relevant part: After the expiration of the 30 days and within 10 days thereafter, the tax collector shall record in the registry of deeds of the county or registry district where the real estate is situated a tax lien certificate signed by the tax collector or bearing his facsimile signature, setting forth the amount of the tax, a description of the real estate on which the tax is assessed and an allegation that a lien is claimed on the real estate to secure the payment of the tax, that a demand for payment of the tax has been made in accordance with this section, and that the tax remains unpaid. {3} . Section 153(2) states as follows: When the last day, including any extension of time, prescribed under this Title for the performance of an act falls on Saturday, Sunday or a legal holiday in this State, the performance of that act is timely if it occurs on the next succeeding day which is not a Saturday, Sunday or legal holiday in this State. {4} . Section 943 states in relevant part: The filing of the tax lien certificate in the registry of deeds shall create a tax lien mortgage on said real estate to the municipality in which the real estate is situated having priority over all other mortgages, liens, attachments and encumbrances of any nature, and shall give to said municipality all the rights usually incident to a mortgagee, except that the municipality shall not have any right of possession of said real estate until the right of redemption shall have expired. The filing of the tax lien certificate in the registry of deeds shall be sufficient notice of the existence of the tax lien mortgage. In the event that said tax, interest and costs shall be paid within the period of redemption, the municipal treasurer or assignee of record shall prepare and record a discharge of the tax lien mortgage in the same manner as is now provided for the discharge of real estate mortgages. If the tax lien mortgage, together with interest and costs, shall not be paid within 18 months after the date of the filing of the tax lien certificate in the registry of deeds, the said tax lien mortgage shall be deemed to have been foreclosed and the right of redemption to have expired. {5} . The second tax lien, for the tax year 1998, was subsequently recorded by the Town on July 15, 1999, in the amount of $1285.58, with interest of $85.35 and costs of $43.90. {6} . On November 15, 2000, the trial court entered an order substituting Ocwen in place of Associates as plaintiff. {7} . Section 943 states in relevant part: The municipal treasurer shall notify the party named on the tax lien mortgage and each record holder of a mortgage on the real estate not more than 45 days nor less than 30 days before the foreclosing date of the tax lien mortgage, in a writing signed by the treasurer or bearing the treasurer's facsimile signature and left at the holder's last and usual place of abode or sent by certified mail, return receipt requested, to the holder's last known address of the impending automatic foreclosure and indicating the exact date of foreclosure. {8} . If Associates and/or Ocwen had not properly recorded their succession in interest to Ford or otherwise notified the Town of their interest in the property, automatic foreclosure pursuant to 36 M.R.S.A. § 943 may have occurred on February 8, 2000. The Town's extending the time of repayment to April 7, 2000, may have waived the earlier foreclosure deadline, assuming the waiver could occur after the foreclosure deadline had passed. This opinion does not address the issue of post-deadline waiver of an automatic foreclosure deadline. {9} . Prior to the hearing, on May 11, 2000, the Town Board of Selectmen held a hearing regarding the matter in executive session. Ocwen again offered payment in full for taxes, interest and fees on the Gile property, which the Board refused. On June 8, 2000, at a second meeting, payment was again tendered and refused. {10} . Rule 19(a) states as follows: (a) Persons to Be Joined if Feasible. A person who is subject to service of process shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest. If the person has not been so joined, the court shall order that the person be made a party. If the person should join as a plaintiff but refuses to do so, the person may be made a defendant. {11} . Section 6321 states in part: "Parties in interest" include mortgagors, holders of fee interest, mortgagees, lessees pursuant to recorded leases or memoranda thereof, lienors and attaching creditors all as reflected by the indicies in the registry of deeds and the documents referred to therein affecting the mortgaged premises, through the time of the recording of the complaint or the clerk's certificate. {12} . Section 6321 states in relevant part: After breach of condition of any mortgage other than one of the first priority, the mortgagee or any person claiming under him may proceed for the purpose of foreclosure by a civil action against all parties in interest, except for parties in interest having a superior priority to the foreclosing mortgagee, in either the Superior Court or the District Court in the division wherein the mortgaged premises or any part thereof is located. Parties in interest having a superior priority shall not be joined nor will their interests be affected by the proceedings, but the resulting sale under section 6323 shall be of the defendant or mortgagor's equity of redemption only . . . . Failure to join any party in interest does not invalidate the action nor any subsequent proceedings as to those joined. {13} . See also Magno v. Town of Freeport, 486 A.2d 137 (Me. 1985) (stating "in the absence of contrary provisions by statute or constitution, a municipality's title to property acquired under the tax-lien-mortgage-foreclosure statute . . . is absolute" and the municipality has "no duty to reconvey the property to the former taxpayer-owner on any theory of equity and good conscience" if payment is then tendered). {14} . See, e.g., Cent. Fed. Savs. F.S.B. v. Laurels Sullivan County Estates Corp., 537 N.Y.S.2d 642, 644 (stating that "[a] tax sale cuts off all prior private titles, liens and encumbrances . . . and upon failure of the mortgagee to redeem the property . . . the tax sale purchaser's title becomes absolute and the mortgage unenforceable" and finding that the mortgage was "accordingly extinguished when the property was conveyed to the County").