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WCP Maine Loan Holdings, LLC v. Norberg

Superior Court of Maine, Hancock

January 16, 2019

WCP MAINE LOAN HOLDINGS, LLC, Plaintiff,
v.
KARL S. NORBERG, et al., Defendants.

          ORDER

          Hun. Robert E. Murray, Justice

          Plaintiff WCP Maine Loan Holdings, LLC (WCP) filed the operative Motion to Strike Jury Demand as to Plaintiffs Claims on March 2, 2018. In this lawsuit filed under the Maine Uniform Fraudulent Transfer Act (UFTA), 14 M.R.S. §§ 3571-3582 (2017), WCP argues that it advances solely equitable claims and seeks solely equitable relief. Because claims equitable in nature are tried to a court and not a jury, WCP contends, Defendant is not entitled to a jury trial on this portion of the case.[1] Defendant argues in response that there is a history of fraudulent transfer cases being tried to juries which means Article 1, Section 20 of the Maine Constitution preserves his right to have the claims tried to a jury.[2]

         This Court held a hearing on the Motion on September 28, 2018, The Court has reviewed the parties' briefs, considered their respective arguments at hearing, and researched Massachusetts and Maine cases on fraudulent transfers of real property dating back to both before and after the adoption of Maine's Constitution in 1820. Based on the following analysis, the Court grants Plaintiffs Motion.

         BACKGROUND

         The allegations in the Complaint, which the Court accepts solely for the purpose of describing the factual circumstances of the case in this Order, establish the following pertinent backdrop:

         In 1999, Defendant Karl Norberg acquired title to certain real estate in Bar Harbor, Maine.[3](Compl. ¶ 7.) On August 27, 2010, at a time when Karl Norberg still held title to the Bar Harbor property, Machias Savings Bank filed two complaints (one in Ellsworth District Court and one in Cumberland County Superior Court) against Karl Norberg. (Compl. ¶¶ 8-9.) Each complaint sought to recover judgment from Karl Norberg for amounts due on separate promissory notes, one for $5, 175, 000 and one for $1, 000, 000. (Compl. ¶¶ 8-9.) Machias Savings Bank also sought to foreclose on separate mortgages securing the distinct promissory notes. (Compl. ¶¶ 8-9.) After each complaint was filed, Machias Savings Bank assigned the above-referenced notes and mortgages securing the same to WCP. (Compl. ¶ 10.) WCP was substituted for Machias Savings Bank as plaintiff in both the Ellsworth action and Cumberland County action. (Compl. ¶ 10.)

         On March 22, 2012, the Ellsworth District Court granted judgment against Karl Norberg in favor of WCP and authorized WCP to sell the property securing the note in that case at a foreclosure auction. (Compl. ¶ 11.) Shortly thereafter, on April 12, 2012, the Cumberland County Superior Court granted judgment against Karl Norberg in favor of WCP and authorized WCP to sell the property securing the subject note at a foreclosure auction, (Compl. ¶ 12.) Following foreclosure auctions in August 2012, WCP was left with a deficiency greater than $2, 600, 000 under the judgment from the Ellsworth District Court and a deficiency greater than $350, 000 under the judgment from the Cumberland County Superior Court. (Compl. ¶¶ 13-14.) Before these two deficiencies had been paid and satisfied, on March 26, 2013, Karl Norberg conveyed title to the Bar Harbor property to Defendant HN Trust for no consideration. (Compl. ¶¶ 15.)

         Then, within approximately a week's span in June 2013, both the Ellsworth District Court and Cumberland County Superior Court issued to WCP deficiency judgments against Karl Norberg, (Compl. ¶¶ 17-18.) Several months thereafter, on March 17, 2014, Defendant HN Trust conveyed the Bar Harbor property to Defendant Hillman Norberg, Karl Norberg's son, for no consideration. (Compl. ¶¶ 6, 19.) Two days later, Hillman Norberg conveyed the Bar Harbor property to Defendant HMAN Trust. (Compl. ¶ 21.) Even though Karl Norberg purported to convey his interest in the Bar Harbor property, he has continued to exercise dominion and control over that property. (Compl. ¶ 23.)

         WCP's Complaint is a two-count complaint in which the first count alleges a fraudulent transfer under 14 M.R.S. § 3575(1)(A), which applies to a debtor who makes a transfer "[w]ith actual intent to hinder, delay or defraud any creditor of the debtor . .. ." (Compl. 5.) The second count alleges a fraudulent transfer under 14 M.R.S. § 3576(1), which makes fraudulent a transfer as to a "creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation." (Compl. 6.) The relief sought by WCP includes, among other requests, a request for a declaration by the Court stating that all referenced transfers be null and void, an order conveying the Bar Harbor property back to Karl Norberg, an injunction preventing any further disposition of the property, the appointment of a receiver to take charge of the property, an order stating that WCP may levy execution upon the property, and damages not to exceed double the value of the property. (Compl. 7.)

         DISCUSSION

         Maine's Constitution provides that, "[i]n all civil suits, and in all controversies concerning property, the parties shall have a right to a trial by jury, except in cases where it has heretofore been otherwise practiced . . . ." Me. Const, art. I, § 20. Though that provision has existed since the adoption of Maine's Constitution, the Law Court has not interpreted it consistently. See generally Carolyn A. Liegner, A Modern Look at the Right to a Civil Jury Trial Under the Maine Constitution, 69 Me. L. Rev. 169 (2017). Despite the inconsistent interpretation of the provision over time, the Law Court settled on an interpretation that is meant to give full weight to the Maine Constitution's preference for jury trials:

Our practice now is to find that there is such a right unless it is affirmatively shown that a jury trial was unavailable in such a case in 1820. If the identical cause of action existed in 1820, the answer of course is easy. The analysis, however, is not limited to such obvious cases. We also consider suits of the same general nature in 1820 to determine whether it was otherwise practiced at that time,

N. Sch. Congregate Hous. v. Merrithew, 558 A.2d 1189, 1190 (Me. 1989) (citations omitted) (quotation marks omitted).[4] As the Law Court has previously explained, "[o]ur constitutional provision safeguards the right to a jury trial on all legal claims." Cyr v. Cote, 396 A.2d 1013, 1016 (Me. 1979). "Where a plaintiff seeks damages as full compensation for an injury, the claim is legal and the plaintiff is entitled to a jury trial." DesMarais v. Desjardins, 664 A.2d 840, 844 (Me. 1995) (citation omitted) (quotation marks omitted). On the other hand, equitable claims are "those requiring creative, injunctive, or unique action by the court . . . ." Thermos Co. v. Spence, 1999 ME 129, ¶ 18, 735 A.2d 484.

         "As to equitable issues, viz., 'cases where it has heretofore been otherwise practiced', no jury trial right exists by virtue of art. I, § 20, although an advisory jury or trial by consent is available . . . ." Cyr, 396 A.2d at 1016. In other words, at the time of the adoption of Maine's Constitution, equitable claims were not entitled to jury trials. Thus, the question becomes, when is a claim legal and when is it equitable?[5] The Law Court has helpfully provided that, "[t]o determine the often elusive question of whether a ...


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