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Oceanic Inn Inc. v. Sloan's Cove, LLC

Supreme Court of Maine

February 23, 2016

OCEANIC INN, INC., et al.
v.
SLOAN'S COVE, LLC

Argued: December 9, 2015

John S. Campbell, Esq., Campbell & Associates, P.A., Portland, for appellants Oceanic Inn, Inc. and Armand Vachon

Daniel L. Cummings, Esq., Norman, Hanson & DeTroy, LLC, Portland, for appellee Sloan's Cove, LLC

SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ. Panel

GORMAN, J.

[¶1] Oceanic Inn, Inc., and Armand A. Vachon (collectively, "Oceanic") appeal from a comprehensive judgment entered in the Business and Consumer Docket (Horton, J.) on their complaint against Sloan's Cove, LLC, and on Sloan's Cove's counterclaim. Oceanic filed suit after Sloan's Cove executed a power of sale foreclosure on Vachon's real property in Old Orchard Beach, claiming that Sloan's Cove conducted the sale improperly. On appeal, Oceanic challenges the dismissals of its claims for breach of fiduciary duty and negligent infliction of emotional distress, and argues that the court also erred in entering summary judgments in Sloan's Cove's favor on Oceanic's claims for breach of contract and accounting and on Sloan's Cove's counterclaim for a declaratory judgment. After amending the judgment to correct a clerical error, we affirm.

I. BACKGROUND

[¶2] In September of 2013, Oceanic filed its eleven-count complaint against Sloan's Cove in the Superior Court (York County), alleging various tort and contract claims based on Sloan's Cove's conduct in connection with the foreclosure by sale of Vachon's property. Among other causes of action, Oceanic claimed breach of fiduciary duty, negligent infliction of emotional distress, breach of contract, and an "action for accounting."[1]

[¶3] With its answer, Sloan's Cove filed a counterclaim seeking a declaration that its foreclosure by sale of the Oceanic Inn property was legal and effective. Soon thereafter, pursuant to M.R. Civ. P. 12(b)(6), Sloan's Cove filed a motion to dismiss all of Oceanic's claims except the action for accounting. After the case was transferred to the Business and Consumer Docket, the court (Horton, J.) granted Sloan's Cove's motion as to nine of Oceanic's claims, including breach of fiduciary duty and negligent infliction of emotional distress, and denied the motion only as to Oceanic's breach of contract claim.

[¶4] Sloan's Cove then sought summary judgments on its counterclaim and on Oceanic's breach of contract claim, and included with its motion for summary judgment a supporting statement of eighteen material facts, each with a reference to supporting evidence. See M.R. Civ. P. 56(h)(1). In opposing the motion, Oceanic responded to Sloan's Cove's statements of fact and included a statement of additional facts containing 145 statements with record citations.[2] See M.R. Civ. P. 56(h)(2). Sloan's Cove replied to Oceanic's opposition, see M.R. Civ. P. 56(h)(3), objecting to most of Oceanic's additional facts as both irrelevant and unsupported by the record. After reviewing the parties' submissions and holding a hearing, the court granted Sloan's Cove's motion, leaving only the action for accounting to be adjudicated.

[¶5] A single set of facts provided the basis for the court's decisions as to both (1) Sloan's Cove's motion to dismiss and (2) Sloan's Cove's motion for summary judgments on Oceanic's breach of contract claim and Sloan's Cove's counterclaim. Although we apply different standards of review to Oceanic's separate challenges to the court's decisions at each of these two stages, in both instances, we view, respectively, the allegations in Oceanic's complaint, and the facts established by the summary judgment record in the light most favorable to Oceanic. See, e.g., Remmes v. Mark Travel Corp., 2015 ME 63, ¶ 3, 116 A.3d 466 (viewing the summary judgment record in the light most favorable to the nonprevailing party); Ramsey v. Baxter Title Co., 2012 ME 113, ¶ 6, 54 A.3d 710 (viewing the complaint in the light most favorable to the plaintiff in an appeal from a Rule 12(b)(6) dismissal). Viewed in the light most favorable to Oceanic, therefore, the record establishes the following set of facts.

[¶6] In 2006, a real estate investment company operated by Georgette and Gerard Proulx, Vachon's mother and stepfather, executed a promissory note in favor of TD Banknorth in the amount of $578, 000. The note provided that it would be "governed by, and interpreted and construed in accordance with, the laws of the State of Maine." As the officers of Oceanic Inn, Inc., the Proulxes also executed a guaranty of the note and a mortgage on the Oceanic Inn property that secured the note and the guaranty in favor of TD Banknorth. The mortgage gave the bank and its assigns a statutory power of sale upon default. See 14 M.R.S. § 6203-A (2012); 33 M.R.S. § 501-A (2012).[3]

[¶7] In 2007, Vachon became the owner of the Oceanic Inn property. Two years later, Sloan's Cove, LLC, which is solely owned by Pauline Beale, Vachon's sister, paid off Oceanic's debt. As part of that transaction, Vachon and Sloan's Cove entered into an "allonge and modification agreement, " pursuant to which Vachon became the sole obligor under the note and agreed to make interest-only monthly payments for two years before paying all the remaining principal and interest in a single balloon payment of $284, 500, and TD Banknorth assigned the mortgage securing the note to Sloan's Cove. Although he apparently made the monthly payments for the next two years, Vachon did not make the balloon payment when it became due in November of 2012.

[¶8] In December of 2012, after it defaulted, Oceanic Inn, Inc., filed a Chapter 11 bankruptcy petition in an attempt to forestall foreclosure by Sloan's Cove. Using funds from her and Vachon's mother's estate, Beale, acting through Sloan's Cove, purchased the claim held by the largest general unsecured creditor of Oceanic Inn, Inc., and was thereby able to block the reorganization plan.[4] The bankruptcy petition was dismissed on August 7, 2013.

[¶9] Sloan's Cove decided to proceed to foreclosure by sale, and its attorney, Daniel Cummings, prepared a sale notice, which he sent to Vachon via registered mail. The sale notice listed the address of the Oceanic Inn property and the book and page number of the mortgage, and stated that the auction was to occur at 9:30 a.m. on September 13, 2013. It was recorded in the York County Registry of Deeds and was published in the Portland Press Herald on August 19, August 26, and September 2, 2013.

[¶10] Hoping to stop the sale, Oceanic Inn, Inc., filed a second Chapter 11 bankruptcy petition during the morning on the day the auction was to occur. Several potential bidders attended the auction later that morning, and three people registered to bid; each paid a $25, 000 deposit. Cummings told the potential buyers that Oceanic Inn, Inc., had filed a bankruptcy petition, but that he believed he could nonetheless proceed with the auction. Although he did not share the information with either the bidders or with Vachon, Cummings had earlier determined that Vachon, and not Oceanic Inn, Inc., was the true owner of the property. Thus, a bankruptcy filing by Oceanic Inn, Inc., would not prevent the sale from proceeding.

[ΒΆ11] Cummings, who is a licensed Maine attorney but not a licensed auctioneer, went forward with the auction that day. Sloan's Cove opened the bidding at $345, 000, and two of the registered bidders bid actively on the property up to the winning bid of ...


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