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Nationstar Mortgage LLC. v. Nelson

United States District Court, D. Maine

October 3, 2016

DEBRA L. NELSON, as Personal Representative of the Estate of Eric R. Nelson, et al., Defendants.



         This case is a diversity action between plaintiff Nationstar Mortgage, LLC (“Nationstar”) and defendants Debra Nelson and Susan Schuyler, in their capacities as Personal Representatives of the Estate of Eric R. Nelson (collectively, the “Estate”).[1] See ECF No. 1 at 1. Nationstar has sued the Estate for breach of promissory note and other claims arising out of the alleged nonpayment of a mortgage and promissory note. See id. at 6-15. The Estate has moved for summary judgment, alleging that the claim preclusion doctrine of res judicata bars Nationstar's complaint. ECF No. 50 at 8-14. Specifically, the Estate contends that it has previously prevailed against Nationstar in a state court case concerning the same mortgage and promissory note at issue here. Id. at 9-12. For the reasons explained below, I grant the Estate's motion.


         According to Nationstar, in 2007, Eric Nelson executed a mortgage and accompanying $225, 000 promissory note (the “Note”) on property Nelson owned located in Biddeford with First Magnus Financial Corporation. ECF No. 1 at 3. The mortgage was subsequently assigned to Aurora Loan Services, LLC (“Aurora”), and ultimately to Nationstar. Id. at 4-5. Nelson died in 2008. Id. at 4. Nationstar alleges that his Estate has failed to make mortgage payments since December 1, 2008. Id.

         On September 4, 2009, Nationstar's counsel, writing on behalf of Aurora, sent a Notice of Mortgagor's Right to Cure (the “Right to Cure Notice”) to the Estate, informing it that the loan was “in default for failure to make payments of principal and interest when due.” ECF No. 51-7 at 57. The notice itemized all past due amounts, stated that the total amount due in order to cure the Estate's default was $18, 155.40, and further stated that “[y]ou have the right to cure the default within 35 days of receipt of this notice[.]” Id. at 58. The letter also stated that “[i]f the default is not cured within this time-frame, Aurora Loan Services, LLC shall exercise it[s] right to accelerate payment of this loan.” Id.

         In November 2009, Aurora filed a complaint of foreclosure against the Estate in the Biddeford District Court (the “State Court Complaint”). ECF No. 51-1. The complaint asserted that as of October 31, 2009, the amount due to Aurora under the terms of the mortgage and note included a principal balance of $221, 248.60 and accrued interest of $16, 040.52, which, together with other fees and charges owed, resulted in a total amount due of $246, 192.29. Id. at 2-3.

         Aurora requested that the court “[d]etermine that there has been a breach of condition in the Plaintiff's mortgage and promissory note[, ]” and “[d]etermine the amount due on said mortgage and promissory note[.]” Id. at 3. Following assignment of the mortgage to Nationstar, Nationstar was substituted for Aurora as the plaintiff. ECF No. 51-3. In addition, the complaint was amended to add a second count to assert a claim of reformation by mutual mistake. ECF No. 51-3 at 2.

         A trial was held in the Biddeford District Court in November 2013. ECF No. 51 at 3, ¶ 10; ECF No. 54 at 2, ¶ 10. Nationstar's sole witness was Brian White, a litigation resolution analyst employed by Nationstar. ECF No. 51 at 3, ¶ 11; ECF No. 54 at 2, ¶ 11. Nationstar sought to introduce the promissory note into evidence by having White testify that the business records of First Magnus and Aurora had been integrated and incorporated into Nationstar's own business records. ECF No. 51-11 at 11. This attempt failed when the court sustained the Estate's hearsay objection on the basis that the testimony failed to establish the business records exception to the rule against hearsay. ECF No. 51-7 at 107-110. Nationstar also attempted to introduce the mortgage into evidence via White's testimony. ECF No. 51 at 3, ¶ 13; ECF No. 54 at 2, ¶ 13. Although the court initially overruled the Estate's hearsay objection, ECF No. 51-7 at 113, it ultimately sustained the objection and the mortgage was withdrawn from evidence for failure to satisfy the business records exception, id. at 121. At the conclusion of White's testimony, Nationstar rested its case.[2] See ECF No. 51-7 at 152. The Estate then moved for a directed judgment, id., which the court granted, id. at 161; see also M.R. Civ. P. 50(d). The judgment stated in part: “Judgment for the Defendants on the Plaintiff's Complaint for foreclosure.” ECF No. 51-8 at 1.

         On appeal, the Maine Law Court affirmed the judgment in a Memorandum of Decision issued in September 2014. ECF No. 51-14. The Memorandum of Decision, which is central to the issue presented here, states, in relevant part:

[T]he trial court did not err in excluding some of Nationstar's witness testimony and documents for failure to demonstrate compliance with the business records exception to the hearsay rule pursuant to M.R. Evid. 803(6). Further, Nationstar did not demonstrate that it had standing to seek foreclosure of the mortgage. The entry is: Judgment affirmed.

Id. (citations omitted).

         Nationstar filed suit in this court in November 2014. See ECF No. 1 at 17. The complaint contains six counts - quiet title, breach of note, breach of contract, quantum meruit, unjust enrichment, and reformation of mortgage. Id. at 6-15. Nationstar also seeks a writ of assistance pursuant to the All Writs Act, 28 U.S.C. § 1651. Id. at 13-14. The Estate has moved for summary judgment contending that Nationstar's claims are barred by the doctrine of res judicata.


         A. Federal Rule of Civil Procedure 56

         Summary judgment is appropriate only if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to summary judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014). In making that determination, a court must view the evidence in the light most favorable to the non-moving party. Johnson v. Univ. ofP.R., 714 F.3d 48, 52 (1st Cir. 2013). “[A] judge's function at summary judgment is not to weigh the evidence and determine the truth of the matter ...

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