John O'Neil, Jr., Justice, Superior Court.
A. Procedural Posture
Plaintiffs Walter and Dorothy Knope ("the Knopes") brought this action against Green Tree Servicing, LLC ("Green Tree") seeking declaratory relief arising out a note and mortgage on their home at 15 Hillside Drive, Eliot, Maine ("the Eliot property"). Specifically, the Knopes demand an accounting and a declaratory judgment stating how much they owe on the mortgage. Prior to filing this action, the Knopes tried unsuccessfully to work out payment options with Green Tree.
The Knopes commenced this action May 30, 2014-less than one month after Green Tree filed an action on May 4, 2014 to foreclose on the Eliot property. Green Tree failed to answer the Knopes' complaint and a default entered. Before the court is Green Tree's motion to set aside the default, motion to dismiss for failure to state a claim, and the Knopes' motion for default judgment.
The Knopes' primary residence is in Sandwich, Massachusetts and the Eliot property is their second home. An oil company failed to make a scheduled delivery to the Eliot property and as a result the pipes burst in January 2013. The incident caused substantial water damage. After the Knopes' insurer refused to pay their claim, they filed an action to recover for the damages from the incident. The Knopes eventually settled with the insurer for a sum less than their total loss. As a result of expenses associated with hiring legal counsel to sue the insurer and repair the Eliot property, the Knopes fell behind on the mortgage with Green Tree. The Knopes tried without success to defer the mortgage and work out practicable payment arrangements.
A. Compulsory Counterclaim
Green Tree moves to dismiss alleging that the claims that form the basis of this suit are compulsory counterclaims in the foreclosure action. In ruling on a motion to dismiss, the court takes the allegations in the complaint as admitted and determines whether the nonmoving party states a cognizable claim. Savage v. Maine Pretrial Servs., Inc., 2013 ME 9, ¶ 2, 58 A.3d 1138.
Rule 13(a)(1) states in relevant part "a pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject mater of the opposing party's claim." M.R. Civ. P. 13(a)(1). Because the Knopes' claims in this action arise out of the transaction or occurrence as the foreclosure action-the note and mortgage on the Eliot property-Green Tree contends the Knopes are barred from litigating their claims here.
Green Tree's argument is premature. In KeyBank National Association v. Sargent, the Law Court affirmed dismissal of claims where they should have been raised in a previous foreclosure action in which judgment already entered. 2000 ME 153, ¶ 25, 758 A.2d 528. Judgment has not yet entered in the foreclosure action. Additionally, the language of the rule explicitly contemplates a pleading as the vehicle for asserting a compulsory counterclaim. M.R. Civ. P. 13(a)(1) ("[A] pleading shall state as a counterclaim . . . ."). The Knopes apparently have not yet been served with a pleading in which to assert the claims; the rule would therefore not apply. Yet even assuming the claims are compulsory counterclaims, Green Tree's motion to dismiss is moot if the court declines to set aside the default.
B. Default Judgment
The court has the power under Rule 55(b)(2) to enter a default judgment. Prior to judgment, a party may move to set aside an entry of default "[f]or good cause shown." M.R. Civ. P. 55(c). "Good cause" requires "a good excuse for his or her untimeliness" Levine v. ...