GMAC Mortgage LLC v. Saunders, No. 22-1-10 Bncv (Wesley, J., Jan. 26, 2011)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
                                                    STATE OF VERMONT
                                                     SUPERIOR COURT

GMAC MORTGAGE LLC                                                   │
 Plaintiff                                                          │
                                                                    │           BENNINGTON UNIT, CIVIL DIVISION
 v.                                                                 │           Docket No. 22-1-10 Bncv
Mary L Saunders, et al                                              │
 Defendant

 v.
Lizanne Degan
Proposed Intervenor
                                                                    │
                                                                    │

                            ORDER DENYING MOTION TO INTERVENE

        Plaintiff brought this foreclosure action on 1/21/2010. Service was complete on
Defendants Mary L. Saunders and Keith Casey on 1/25/2010 and on Defendant
Citifinancial, Inc. on 2/3/2010. Default judgment issued against Citifinancial on
5/12/2010. Following a hearing on Plaintiff’s motion for summary judgment against
Defendants Saunders and Casey, the Court granted Defendants one week to seek
mediation pursuant to recently enacted 12 V.S.A. § 4633, indicating in its entry issued
7/29/2010 that the proceedings would be stayed pending mediation. The Court approved
Defendants’ request for mediation by entry issued 9/2/2010, and the parties have
specified Rodney McPhee, Esq. as the mediator by designation filed 9/28/2010. There is
no report, as yet, regarding the results of mediation.

         On 11/3/2010, purporting to represent an interested party, Lizanne Degan,
Attorney A. Jeffrey Taylor entered his appearance and filed a Motion to Dismiss,
claiming that Plaintiff was without standing to prosecute the foreclosure action. In
response, the Court held on 11/17/2010 that Ms. Degan’s motion could not be accepted
for filing as she had not sought leave to intervene pursuant to V.R.C.P. 24.

        Proposed Intervenor Degan has now filed a motion pursuant to Rule 24 by which
she claims an interest in the subject property arising from a judicial lien, and seeks to
prosecute common questions of law and fact which she claims are inherent in the
foreclosure action; namely, her contention that Plaintiff is without standing and that her
judicial lien must be accorded priority over the note and mortgage which are the subject
of Plaintiff’s foreclosure complaint.

        Plaintiff opposes the motion to intervene. It is undisputed that Ms. Degan’s
judicial lien, based on a restitution judgment against Defendant Saunders, was not
recorded in the Manchester Land Records until 7/29/2010, more than six months
following Plaintiff’s recording of its foreclosure complaint on 1/21/2010. Thus, at the
time she recorded her judgment, Ms. Degan was on record notice of the pending
foreclosure action and became subject to any judgment “without further notice or
service”. 12 V.S.A.§ 4523. Having attempted to establish an interest in the subject real
estate after record notice of the foreclosure action had been perfected, Ms. Degan is
entitled to neither party status, nor redemption rights. Her suggestion that her motion to
intervene should be granted because there is no final judgment is unsupported by any
authority, and inconsistent with the statutory scheme represented by §4523 and § 4524,
both of which establish summary proceedings without further notice or hearing for
extinguishing the interests of claimants which were filed after the filing of the foreclosure
complaint in the town clerk’s office.

        Even assuming that the above-cited statutes did not effect a complete bar to Ms.
Degan’s attempt to seek party status to challenge the priority of Plaintiff’s mortgage, she
has failed to show that she has any legal claims that merit granting her motion to
intervene. By her claim that Plaintiff’s mortgage is a nullity and without legal existence,
due to the presence in the chain of title of Mortgage Electronic Registration Systems
(MERS), Ms. Degan extrapolates from two trial court decisions, Deutsche Bank v
Parisella, et al, Doc. No. S0758 -09 Cnc (Toor,J.), which in turn relied on Judge Cohen’s
ruling in MERS v Johnston, Doc. No. 420-6-09 Rdcv. However, neither of those
holdings stand for the proposition that a mortgage which was granted initially, or later
assigned, to MERS voids the underlying obligation or makes the note and mortgage
unenforceable. Rather, as Judge Cohen allowed inU.S. Bank National Association v
Wyman, et al, Doc. No. 466-6-09 Rdcv (Entry Order Re Motion for Default Judgment,
10/20/2009), this Court has addressed the apparent lack of standing on the face of
complaints involving MERS by granting the plaintiff an opportunity within a reasonable
time to demonstrate “that it is entitled to enforce the Promissory Note pursuant to 9A
V.S.A. § 3-301”. In a majority of cases, plaintiffs in such situations have succeeded in
remedying the initial defects in pleading.

         In the current action, the Court perceived no insufficiency on the face of
Plaintiff’s complaint with regard to standing. The complaint recites that mortgagors
granted a note to GMAC Mortgage Corporation d/b/a ditech.com. Although MERS was
the original mortgagee, the complaint further alleges that as nominee for GMAC
Mortgage Corporation d/b/a ditech.com, MERS assigned the mortgage to Plaintiff,
GMAC Mortgage, LLC. Most importantly, the complaint alleges at ¶ 6 that the
promissory note executed in favor of GMAC Mortgage Corporation d/b/a ditech.com
“was endorsed in blank and Plaintiff is in possession of the note”. This allegation
directly addresses the defect in standing identified by Judge Cohen, when he expressed
concern that “the Court cannot allow the assignee of only a security interest to enforce
the mortgage deed, as this could expose the obligor to a double liability; a ‘person to
enforce’, 9A V.S.A. § 3-301, could later rightly seek to enforce the unsecured
obligation.” Wyman at p. 4. Contrary to Wyman, where the complaint was silent as to the
status of the original note, Plaintiff here alleges that it is a holder, legally entitled to
enforce the promissory note and its underlying mortgage, since it is currently in physical
possession of the note, endorsed in blank. See, 9A V.S.A.§ 3-205(b)(blank indorsement
becomes payable to bearer). In short, the spectre of some other holder entitled to enforce



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the note - which was the principal concern of Judge Cohen and others who have
questioned standing sua sponte in transactions in which MERS role as nominee is
inadequately explained - is absent when Plaintiff supports its claim of assignment with
possession of the original note, properly indorsed.

         As explained above, Ms. Degan has not demonstrated that she has any right to
intervene as a junior lienholder attempting to establish an interest after Plaintiff provided
record notice of this foreclosure action. Even if her claim was not absolutely barred by
the notice statute, she has established no colorable basis for the claim that her judgment
lien is entitled to priority over the note and mortgage now held by Plaintiff.

       Dated at Bennington this              day of                         , 2011.



                                               _____________________________
                                               John P. Wesley
                                               Superior Court Judge




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