Machias Savings Bank v. Ramsdell
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MAINE SUPREME JUDICIAL COURTReporter of Decisions
Decision: 1997 ME 20
Docket: WAS-96-244
Submitted on briefs December 5, 1996
Decided February 4, 1997

PANEL:   	WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and
LIPEZ, JJ.  



MACHIAS SAVINGS BANK

v.

YVONNE RAMSDELL et al.


GLASSMAN, J.  
	[¶1] Yvonne Ramsdell and Sonja Ramsdell appeal from the summary 
judgment entered in the Superior Court (Washington County, Marsano, J.) in
favor of the Machias Savings Bank on its complaint against the Ramsdells{1}
seeking the foreclosure of mortgages.  Yvonne contends the court abused its
discretion by its ruling on her motion to amend her answer to the Bank's
complaint and erroneously applied the doctrine of res judicata to bar her
affirmative defense that the Bank violated the provisions of the Equal Credit
Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f (1982 & Supp. 1996). 
Sonja contends that because there is a genuine issue of material fact as to
whether she signed the modifications to certain loan agreements the court
erroneously granted a summary judgment.  We vacate the judgment.  
	[¶2]  This case involves a series of loans made by the Bank to the
Ramsdell Construction Company and its principals Roland Ramsdell and his
son Kenneth Ramsdell.  Yvonne Ramsdell, the wife of Roland, and Sonja
Ramsdell, the former wife of Kenneth, signed some of the loan documents. 
The loan transactions relevant to this appeal are: (1) On April 5, 1988,
Kenneth and Sonja executed a $60,000 note and mortgage deed to the
Bank; (2) on November 20, 1989, Kenneth and Sonja executed a $75,000
note and mortgage deed to the Bank; (3) on June 9, 1989, Roland, Kenneth
and Yvonne executed notes for $250,000 and $500,000 to the Bank secured
by mortgage deeds executed by Roland and Kenneth; (4) on April 19, 1991,
Roland, Kenneth, Sonja and Yvonne executed a $170,000 note to the Bank
secured by a mortgage executed by Roland, Kenneth and Yvonne; (5) on July
16, 1992, Roland, Kenneth and Yvonne executed a $350,000 note to the
Bank secured by two separate mortgage deeds executed by Roland, Kenneth
and Yvonne.{2}  The Ramsdells have defaulted in their payment obligations.  
	[¶3] In February 1993, the Bank brought the present action in the
District Court against Roland, Kenneth, Yvonne and Sonja.  Yvonne's answer
asserts a general denial and, inter alia, the affirmative defenses of accord
and satisfaction and waiver.  Sonja's answer is a general denial of the
allegations in the Bank's complaint.  Yvonne removed the case to the
Superior Court.  Defaults were entered against Roland and Kenneth.  On
June 1, 1994, Yvonne filed a motion to amend her answer to add, inter alia,
affirmative defenses to include: (1) violation of the provisions of the ECOA;
(2) misrepresentation; (3) failure of consideration; (4) the doctrine of
hindrance and prevention; (5) estoppel; (6) negligence and contributory
negligence; and (7) unclean hands.  Following a hearing, the trial court
(Alexander, J.) granted her motion to amend her answer to add affirmative
defenses alleging ECOA violations and misrepresentation, but denied her
motion as to the remaining defenses.  
	[¶4] The Bank moved for a summary judgment in August 1994,
contending that there was no evidence to sustain Yvonne's affirmative
defenses, including the ECOA defense, and that the foundational documents
overcame Sonja's general denial to the Bank's complaint.  Yvonne filed her
opposition to the Bank's motion, alleging that there remained several
genuine issues of material fact concerning her various affirmative defenses. 
Sonja's response to the Bank's motion alleged that a genuine issue of
material fact existed as to whether she had signed modifications to the 1988
and 1989 loan agreements originally executed by her and Kenneth.  
	[¶5] In April 1994, during the pendency of this action, Yvonne filed a
complaint seeking damages against the Bank in the United States District
Court for the District of Maine, alleging, inter alia, that the Bank had violated
the provisions of the ECOA, 15 U.S.C. § 1691(a)(1) (1982),{3} by requiring her
signature to the 1989, 1991 and 1992 loan transactions.  On December 8,
1994, the United States Magistrate considered the Bank's motion for a
summary judgment on Yvonne's claims.  The Magistrate concluded that
Yvonne's claims regarding the 1989 and 1991 loans were time barred
pursuant to 15 U.S.C. § 1691e(f) that requires civil actions for damages
resulting from alleged violations of the Act to be brought within two years of
the date of the occurrence of the violation.  Regarding the 1992 loan, the
Magistrate, in interpreting the ECOA, relied on the federal regulation that
provides, "a creditor shall not require the signature of the applicant's
spouse . . . on any credit instrument if the applicant qualifies under the
creditor's standards of creditworthiness for the amount and terms of the
credit requested." 12 C.F.R. § 202.7(d)(1) (1996).  The Magistrate found
that Roland was not creditworthy at the time of the 1992 loan, and
accordingly, Yvonne could not prevail on her claim of a violation of the
provisions of the ECOA as to the 1992 loan.  The Magistrate's decision was
adopted by the District Court.  
	[¶6] Following a hearing in the Superior Court, the court granted
Yvonne's motion to stay the present action pending the appeal from the
judgment of the District Court to the United States Court of Appeals for the
First Circuit.  In granting the motion, the court stated: 
The underlying issues raised by the defendant, Yvonne Ramsdell,
have been the subject of a decision in the Federal District Court .
. . .  While this Court would be prepared to accept Magistrate
Beaulieu's decision and move forward to Summary Judgment on
the basis of those findings, the fact that the matter is on appeal
[to the First Circuit] on a "de novo" basis suggests to this Court
that the matter stand in abeyance pending resolution of the
matter on appeal.  

The Court of Appeals affirmed the decision of the District Court on August
30, 1995.  Ramsdell v. Bowles, 64 F.3d 5 (1st Cir. 1995).  Thereafter,
following a hearing, the Superior Court granted the Bank's motion for a
summary judgment.{4}  Yvonne and Sonja appeal.  
	[¶7] Yvonne first contends that the trial court abused its discretion by
not allowing all her claimed affirmative defenses set forth in her motion to
amend her answer to the Bank's complaint.{5}  We disagree.  Maine Rule of
Civil Procedure 15 addresses that period within which a party's pleading
may be amended as a matter of course.  A defendant has a comparable period
of time to amend an answer as does a plaintiff to amend a complaint.  1
Field, McKusick & Wroth, Maine Civil Practice §§ 15.2, 15.4 (2d ed. 1970). 
Thereafter, the party seeking to amend a pleading can do so only by leave of
court or by written consent of the other party.  M.R. Civ. P. 15.  A motion
seeking such leave to amend is committed to the sound discretion of the
court.  Glynn v. City of South Portland, 640 A.2d 1065, 1067 (Me. 1994). 
One seeking to overturn the trial court's ruling on the motion "must
demonstrate a clear and manifest abuse of that discretion and must
demonstrate that granting such motion is necessary to prevent injustice."
Id. (citation and quotation omitted).  
	[¶8] Yvonne's motion to amend was filed over a year after her original
answer.  Moreover, she concedes that those proposed defenses denied by
the court, with the exception of the defense of the failure of consideration,
were simply clarifications of the defenses alleged in her original answer.  We
find nothing in this record that demonstrates the granting of the motion to
allow the defense of failure of consideration was necessary to prevent an
injustice.  Nor does the record demonstrate there is a clear and manifest
abuse of the court's discretion by its ruling on Yvonne's motion.  
	[¶9] Yvonne next contends that because the decision of the federal
court is not a bar to her affirmative defense that the Bank violated the
provisions of the ECOA, the trial court erred by granting the Bank's motion. 
She concedes that the federal court's factual determination that Roland was
not creditworthy at the time of the 1992 transaction precludes this
affirmative defense to that loan.  She argues that the federal court's finding
that the statute of limitations barred her affirmative claims that the Bank
had violated the provisions of the ECOA with regard to the 1989 and 1991
loans does not preclude her affirmative defense of the Bank's violation of
provisions of the ECOA in the present action.  We agree.  
	[¶10] When reviewing the grant of a motion for a summary judgment,
we view the evidence in the light most favorable to the party against whom
the judgment was entered to determine whether the record supports the
trial court's conclusion that there is no genuine issue of material fact and
the movant is entitled to a judgment as a matter of law.  Simpson v. Central
Maine Motors, Inc., 669 A.2d 1324, 1325-26 (Me. 1996); M.R. Civ. P. 56.  
	[¶11] The doctrine of res judicata "is a court-made collection of rules
designed to ensure that the same matter will not be litigated more than
once." Beegan v. Schmidt, 451 A.2d 642, 644 (Me. 1982).  The doctrine has
developed two separate components, issue preclusion and claim preclusion. 
Id.  Issue preclusion, also referred to as collateral estoppel, prevents the
relitigation of factual issues already decided if "the identical issue was
determined by a prior final judgment, and . . . the party estopped had a fair
opportunity and incentive to litigate the issue in a prior proceeding." Van
Houten v. Harco Const., Inc., 655 A.2d 331, 333 (Me. 1995) (citation and
quotation omitted).  Claim preclusion "bars relitigation if: (1) the same
parties or their privies are involved in both actions; (2) a valid final
judgment was entered in the prior action; and (3) the matters presented for
decision in the second action were, or might have been litigated in the first
action." Department of Human Serv. v. Comeau, 663 A.2d 46, 48 (Me. 1995).
	[¶12] By this action, the Bank seeks, inter alia, to foreclose the
mortgages securing the June 9, 1989 and April 19, 1991 loans.  While there
is a two-year statute of limitations within which to bring an affirmative action
pursuant to the provisions of the ECOA, there is no limitation period on the
use of the Act as a defense in the nature of recoupment in an action for
foreclosure.  Mundaca Inv. Corp. v. Emery, 674 A.2d 923, 925 (Me. 1996);
Federal Deposit Ins. Corp. v. Notis, 602 A.2d 1164, 1166 (Me. 1992).  In the
federal court proceedings Yvonne did not, and could not, litigate the issue of
creditworthiness as it relates to the 1989 and 1991 loans and neither claim
preclusion nor issue preclusion bars Yvonne from establishing the violation
of the provisions of the ECOA as an affirmative defense to the Bank's present
action.  See, e.g., Mutual Fire Ins. Co. v. Richardson, 640 A.2d 205, 208 (Me.
1994) (prior judgment can only be used for collateral estoppel if the
identical issue necessarily was determined by a prior final judgment, and the
party estopped had a fair opportunity and incentive to litigate the issue in
the prior proceeding); Justice v. Martig, 570 A.2d 1211, 1212 (Me. 1990)
(res judicata only applies to issues which were or may have been litigated in
prior action).  Accordingly, there remains a genuine issue of material fact as
to whether the Bank violated the provisions of the ECOA by requiring
Yvonne's signature for the 1989 and 1991 loans, and the trial court erred in
granting the Bank's motion for a summary judgment in its favor.  See
Mundaca Inv. Corp. v. Emery, 674 A.2d at 925 (affirmative defense of ECOA
violation creates genuine issue of material fact precluding a summary
judgment for both the applicant and guarantor spouse).  
	[¶13] Sonja also contends that the trial court erred by granting the
summary judgment in favor of the Bank.  By her answer Sonja failed to plead
a violation of the provisions of the ECOA as an affirmative defense.  See
Federal Deposit Ins. Corp. v. Notis, 602 A.2d at 1165 ("Recoupment must be
pleaded affirmatively, and if it is not raised it is ordinarily deemed waived."). 
In response to the Bank's motion for a summary judgment, she contends
only that she did not sign modifications to the 1988 and 1989 notes and
mortgages originally executed by her and Kenneth.  See Roy v. Danis, 553
A.2d 663, 664 (Me. 1989) (although contract may be modified by subsequent
agreement, the new agreement must comply with the requirements of a
valid contract).  The record before us does not address her contention nor
include modification agreements relating to the loans at issue.  The record
is unclear as to whether in fact these loans were modified.  However, the
Bank's statement of material fact, in support of its motion for a summary
judgment, makes reference to the modification of the 1988 and 1989 loan
agreements.  Because on this record we conclude there remains a genuine
issue of material fact as to whether, as contended by Sonja, the 1988 and
1989 notes and mortgages were modified without her consent, the court
erroneously granted a summary judgment in favor of the Bank on its
complaint against her.  Simpson v. Central Maine Motors, Inc., 669 A.2d at
1325-26; M.R. Civ. P. 56.  
	The entry is:
Judgment of foreclosure as to Yvonne Ramsdell
and Sonja Ramsdell vacated.  Remanded for
further proceedings consistent with the
opinion herein. 
                                                               
                                                               
Attorney for plaintiff:

Stephen G. Morrell, Esq.
Eaton, Peabody, Bradford & Veague, P.A.
P O Box 9
Brunswick, ME 04011

Attorneys for defendants:

Ralph A. Dyer, Esq.	
477 Congress Street, Suite 1010	
Portland, ME 04101
(for Yvonne Ramsdell)	

Sonja Ramsdell, pro se
HCR 69, Box 214
East Machias, ME 04630
Anthony Ferguson, Esq.
Fales & Fales
P O Box 889
Lewiston, ME 04243
(for Public Works Supply Co.)

Pasquale Perrino, Esq.
124 State Street
Augusta, ME 04330
	
Andrew Ketterer, Attorney General	
Gwendolyn Thomas, Asst. Atty.Gen.
6 State House Station
Augusta, ME 04333
(for Bureau of Taxation, et al.)

Thomas F. Shehan, Jr. 
P O Box 1423
Bangor, ME 04402
(for Kenneth & Roland Ramsdell)

Dennis Mahar, Esq.
Fletcher & Mahar
P O Box 402
Calais, ME 04619
(for Lubec Water & Electric Dist.)

Norman P. Toffolon, Esq.
P O Box 698
Machias, ME 04654
(for Burtco, Inc.)

FOOTNOTES******************************** {1} Roland and Kenneth Ramsdell, also named as defendants in this action, have not challenged the default judgments entered against them in favor of the Bank. {2} Roland executed the 1989 notes individually and on behalf of Roland W. Ramsdell & Sons, Machias Ford Mercury, Inc. and Ramsdell Construction Co. Kenneth, under a power of attorney from Roland, signed the 1991 note for Roland individually and on behalf of Ramsdell Construction. Roland executed the 1992 note individually and on behalf of Ramsdell Construction. {3} The Act provides in pertinent part: (a) It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction -- (1) on the basis of . . . marital status . . . . 15 U.S.C.