Preview:

STATE OF MAINE CUMBERLAND, ss.

SUPERIOR COURT CIVIL ACTION DOCKET NO: CV-05-553

/

cumberland, ssl Clerk's m c e
SUPERIOR COURT

STATE OF MAINE

TD BANKNORTH, Plaintiff

v.
MORSE BROTHERS, TIMOTHY MORSE and BENJAMIN HAWKINS , Defendants

* * * * * * * * * * * *

AUG 0 1 2006

ORDERS

This case comes before the Court on the following eight motions filed by the respective parties: Plaintiff TD Banknorth's motion for partial summary judgment; Defendant Morse's Rule 56(f) motion; Defendant Hawkins' motion to set aside entry of default; Defendant Hawkins' motion to dismiss counts I1 and 111; Defendant Morse's motion for reconsideration; Defendant Hawluns' motion to vacate discovery order; Defendant Morse's motion to amend answer and counterclaim; and Defendants motion to quash subpoena.
BACKGROUND

This is a dispute over a financing agreement between the former partners Benjamin Hawluns and Timothy Morse of Morse Brothers Inc, a mulching business, and TD Banknorth (the "Bank"). For the past twelve years, the Bank has provided financing to Defendants to run their business. According to the Bank, Defendants simply breached the agreement and defaulted on the loans.

Specifically, the Bank claims that Defendants fraudulently overstated the financial performance of the company in order to secure financing from the Bank. According to Defendants, they admit that they mistakenly overstated the financial performance due to rainy conditions that expanded the mulch, thus making the quantity appear greater than it was. However, they claim that the Bank agreed to work with them to correct the mistake.' The Bank filed a complaint on September 21, 2005, alleging that Defendants were in default of two promissory notes, the "Term Note" and the "Line." The complaint alleges that the Bank made a demand for full payment ($4,519.824.83 plus interest) and Defendants have refused to pay. On the same day, the Bank sought and was granted an ex-parte attachment in the amount of $1,500,000. In January 2006, the Bank amended its complaint to include a count of fraud.2 On February 6, 2006, the Bank filed a motion for summary judgment on count I of the complaint. The Bank is seeking a determination that

Defendants are indebted to the Bank pursuant to the Term Note, dated December 21,2001, and the Line, dated March 16,2001.
MOTIONS

1. 2.
1

Motion for Partial Summarv Tudgment Filed by TD Banknorth Motion to Enlarge Time to Respond to TD Banknorth's Motion for Partial filed by Defendant Morse. Summary Tud~ment

Defendants also claim that pursuant to later amendments, the Notes did not become due until a later date, November 30,2005, and therefore they were not in default as of the date of filing of the complaint, September 21,2005. Defendants' position is that the Bank failed to take into consideration the amendments to the original lending documents. The amended count states that Defendants hid their noncompliance with the load covenants causing, encouraging, directing employees to falsify the books and records of those companies to overstate the assets and the financial performance of the company in order to secure financing from the Bank.

On February 6, 2006, the Bank filed a motion for summary judgment on count I of the complaint. On March 21, 2006, Defendant Morse filed a motion pursuant to M.R Civ. P 56(f) for the Court to postpone judgment on the pending summary judgment motion in order for Morse to properly oppose the motion by allowing for more discovery. Pursuant to M.R. Civ. P. 56(f), Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just. Morse argues that when the Bank's motion for summary judgment was filed, while he was diligently accumulating the financial information necessary to oppose the motion, not only had discovery had just begun, but discovery has been stalled for various reasons. Apparently, M.B. Bark, LLC, purchased the business assets of Morse Brothers Inc. following the bankruptcy proceeding. Thus, a large number of business documents relevant to this case reside with M.B. Bark and have not been available for review by the parties. Without the opportunity to thoroughly review their own business documents, Defendants have been unable to adequately oppose the Bank's motion for summary judgment. Because of the complexity of this case and the need to conduct more discovery, the Rule 56(f) motion is granted. At hearing, the parties agreed that the Bank will copy and provide all the documents requested as soon as p ~ s s i b l e . ~ Once Attorney MacColl certifies that he has copied and delivered the files, the

As for emails containing attorney client privilege, the parties will draft a proposed order for Defendants to review the emails and then submit a privilege log to the Court for final determination.

parties are given sixty days from the date of certification to file motions for summary judgment. 3. Defendant Hawluns' Motion to Set Aside Entrv of Default and Amended Motion
On January 30, 2006, the clerk of courts entered an entry of default on

count I against Defendant Benjamin Hawluns for failure to file a timely answer to the complaint. On February 2, 2006, in response to the Bank's motion to determine the adequacy of service of process on Hawkins, the Court found that service of process was duly and properly made. Hawluns then filed a motion to reconsider the Order determining adequate service of process. On March 20, 2006, the Court denied Hawkins' request for reconsideration. On May 9, 2006, Hawkins filed a motion to set aside the entry of default pursuant to M.R. Civ. P. 55(c). Pursuant to M.R. Civ. P. 55(a), the clerk may enter a default in a matter without court approval if a defendant "has failed to plead or otherwise defend." Ireland v. Carpenter, 2005 ME 98, q[ 5, 879 A.2d 35, 36. Pursuant to M.R. Civ. P. 55(c), "for good cause shown the court may set aside an entry of default." To establish such "good cause," the moving party is required to show both a good excuse for the untimeliness of the filing of the complaint, and the existence of a meritorious defense. Ireland, 2005 ME 98,

Download CUMcv-05-553.pdf

Maine Law