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Residential Mortgage Loan Trust 2013-TT2 v. Lloyd

United States District Court, D. Maine

April 29, 2016




This case presents the question whether the abstention doctrine announced in Burford v. Sun Oil Co., 319 U.S. 315, 331-33 (1943), applies to a legislatively and judicially created program governing Maine’s residential foreclosure process. After oral argument on April 20, 2016, I conclude that the circumstances here do not overcome this court’s virtually unflagging obligation to exercise jurisdiction where it exists, and I Deny the defendant’s motion to dismiss based on Burford abstention.

Procedural History

The plaintiff Residential Mortgage Loan Trust 2013-TT2, by U.S. Bank of America as legal title trustee (hereafter “Residential Mortgage”) brought a complaint in this court alleging six counts against the defendant Joane K. Lloyd[1]for foreclosure (Count I), breach of note (Count II), breach of contract (Count III), quantum meruit (Count IV), unjust enrichment (Count V), and Writ of Assistance pursuant to 28 U.S.C.A. § 1651 (2006 & Supp. 2015) (Count VI). In essence the lawsuit seeks to collect on the Note and foreclose the mortgage on the defendant’s house. The defendant Joane Lloyd responded by filing a motion to dismiss, arguing that this federal court should abstain, under Burford v. Sun Oil Co., from exercising its jurisdiction because the Maine Foreclosure Diversion Program, devised jointly by the legislative and judicial branches of Maine, has created a pretrial mediation process involving a matter of “ongoing critical public policy” with procedures impossible to replicate in the federal system. Def.’s Mot. to Dismiss on Abstention Grounds at 11, 19 (ECF No. 9).

In February, I held a conference with counsel to discuss the proper mechanism for creating the factual record upon which I could base my decision on the motion to dismiss. Thereafter, the defendant submitted evidence in the form of affidavits from various people involved in Maine’s Foreclosure Diversion Program, see Affs. in Support of Def.’s Mot. to Dismiss (and attached exhibits) (ECF No. 34-37), and requested that I take judicial notice, pursuant to Fed.R.Civ.P. 201, of six “facts” related to the origin of the Foreclosure Diversion Program and the interaction of the Maine Legislature and Judiciary to create a comprehensive framework for foreclosure cases in Maine, see Def.’s Request for Judicial Notice (ECF No. 38). The plaintiff opposed the defendant’s motion to dismiss, arguing that Burford is inapplicable to this case because there is no separate and distinct administrative body charged with reviewing foreclosures in Maine (and thus no threat of federal interference with a state regulatory system) and because this District’s local rule addressing alternative dispute resolution is capable of replicating the mediation processes in the Foreclosure Diversion Program. See Pl.’s Opp’n to Def.’s Mot. to Dismiss at 2, 7-8 (ECF No. 19); Pl.’s Opp’n to Def.’s Mem. Regarding Evidence Offered in Support of Mot. to Dismiss On Abstention Grounds & Reply to Request for Judicial Notice at 5-7 (ECF No. 46). I heard oral argument on the defendant’s motion on April 20, 2016.


After the housing crisis a few years ago, Maine’s Foreclosure Diversion Program was established in response to the substantial increase of foreclosure matters in state courts. See L.D. 1418, Emergency Preamble (124th Legis. 2009). Title 14, section 6321-A of the Maine Revised Statutes, enacted as emergency legislation in 2009, instructed the Supreme Judicial Court of Maine to adopt rules to “establish a foreclosure mediation program to provide mediation in actions for foreclosure of mortgages on owner-occupied residential property with no more than 4 units that is the primary residence of the owner-occupant.” 14 M.R.S.A. § 6321-A(3) (Supp. 2015); see P.L. 2009, ch. 402, § 18 (emergency, effective June 15, 2009). The statute directed that the foreclosure mediation program “must address all issues of foreclosure, including but not limited to reinstatement of the mortgage, modification of the loan and restructuring of the mortgage debt.” 14 M.R.S.A. § 6321-A(3). Through section 6321-A, the Maine Legislature aimed to create a simple, stream-lined process for unrepresented Maine homeowners who wanted to participate in mediation: specifically requiring that homeowners receive, with the summons and complaint for foreclosure actions, a one page answer form that constituted a complete answer to the foreclosure complaint, gave the homeowner the opportunity to assert all affirmative defenses, and ensured participation in mediation. See id. § 6321-A(2). The statute mandates the following:

- The state court must assign mediators to the program who “[a]re trained in mediation and relevant aspects of the law related to real estate, mortgage procedures, foreclosure or foreclosure prevention; [h]ave knowledge of community-based resources that are available in the judicial districts in which they serve; [h]ave knowledge of mortgage assistance programs; [a]re trained in using the relevant Federal Deposit Insurance Corporation forms and worksheets; [a]re knowledgeable in principal loss mitigation and mortgage loan servicing guidelines and regulations; and [a]re capable of facilitating and likely to facilitate identification of and compliance with principal loss mitigation and mortgage loan servicing guidelines and regulations, ” id. § 6321-A(7)(A);[2]
- The mediator, at any time during the process, can refer the homeowner to a housing counselor or mortgage assistance program, id. § 6321-A(8);
- A final judgment in a foreclosure action may not issue until a mediator’s report has been completed indicating whether the mediation resulted in settlement or dismissal, whether the parties reached any agreements during mediation, whether either party failed to negotiate in good faith, and the time frames established by the parties for all actions to be taken, id. § 6321-A(9), (13);
- Certain parties must appear at the mediation, id. § 6321-A(11); and
- “Each party and each party’s attorney . . . shall make a good faith effort to mediate all issues. If any party or attorney fails to attend or to make a good faith effort to mediate, the court may impose appropriate sanctions, ” id. § 6321-A(12).

In response to the Legislature’s directive, the Supreme Judicial Court of Maine adopted Rule 93 of the Maine Rules of Civil Procedure in 2010, which created the Foreclosure Diversion Program. See M.R. Civ. P. 93. The Program, managed by an employee of the Maine Judicial Branch, is a comprehensive mediation process for foreclosures in Maine. See id. 93(b)(2). In addition to the requirements of section 6321-A, Rule 93 authorizes the implementation of “informational sessions” for homeowners faced with foreclosure to ensure that homeowners have the necessary information regarding foreclosure proceedings and the diversion program, M.R. Civ. P. 93(c)(2); prohibits a mortgagee from filing any dispositive motions or requests for admissions prior to the completion of mediation “or until the court orders that mediation shall not occur, ” id. 93(d)(1); requires the presence at mediation of “the plaintiff, or a representative of the plaintiff, who has the authority to agree to a proposed settlement, loan modification, or dismissal of the action, ” id. 93(h)(1)(D); authorizes the mediator to conduct multiple sessions at court locations throughout the state to effectively guide the parties through the diversion program, id. 93(i), (l); and allows the court, if it finds that a party “fail[ed] to attend or to make a good faith effort to mediate, ” to order sanctions including, but not limited to, “tolling of interest and other charges pending completion of mediation, assessment of costs and fees, ” awarding attorney fees, entry of judgment, dismissal without ...

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