The Bank of New York Mellon v. Marjorie Johnston & Kamberleigh Johnston

VERMONT SUPREME COURT Case No. 2020-244
109 State Street
Montpelier VT 05609-0801
802-828-4774
www.vermontjudiciary.org
Note: In the case title, an asterisk (*) indicates an appellant and a double asterisk (**) indicates a cross-
appellant. Decisions of a three-justice panel are not to be considered as precedent before any tribunal.
ENTRY ORDER
OCTOBER TERM, 2021
The Bank of New York Mellon** v. Marjorie
Johnston* & Kamberleigh Johnston*
}
}
APPEALED FROM:
} Superior Court, Rutland Unit, Civil Division
} CASE NO. 433-7-18 Rdcv
Trial Judge: Robert A. Mello
In the above-entitled cause, the Clerk will enter:
In this case, the trial court dismissed with prejudice a foreclosure complaint that plaintiff
bank filed against defendants. Defendants argue that the court erred in denying their motion for
reconsideration. The bank cross-appeals, arguing that the court erred in dismissing its complaint
with prejudice. We reverse and remand to the trial court to enter an order dismissing the case
without prejudice.
The bank filed a foreclosure complaint against defendants in July 2018. Among other
things, the complaint recited that upon information and belief, defendant Marjorie Johnston
resided in Rutland, Vermont and that Kamberleigh Johnston had “an address located in Fairfax,
Virginia.” The complaint alleged that Marjorie Johnston executed the note and mortgage deed;
Kamberleigh Johnston was noted to have a possible interest in the property based on various
liens he filed against the property recorded in the land records. Kamberleigh Johnston had to be
served by publication in the Rutland Herald and defendants did not file an answer until July
2019. In October 2019, the bank sought to amend its complaint, stating that it had inadvertently
omitted additional items, such as a license to use and a “perpetual lease agreement,” filed and
recorded on the property by defendants.
In a January 2020 handwritten entry order, the court granted the bank’s request to amend
its complaint but rejected the amended complaint it had submitted. The court directed the bank
to file a revised amended complaint within fourteen days that was “accurate as to Kamberleigh
Johnston’s residence in Vermont and specifies facts related to acceleration of the loan.” The
court indicated that the bank had caused the case to be delayed due to its error and it therefore
could not recover interest or attorney’s fees from the date the complaint was filed until the date
of the court’s January 2020 order. The precise nature of this error is not explained in the court’s
entry order. The bank filed a revised amended complaint within the time frame directed by the
court. The amended complaint listed Kamberleigh Johnston as a resident of Rutland, Vermont,
included language regarding the acceleration of the loan, and listed various potential claims or
interests in the mortgaged property.

2
Defendants then moved to dismiss the complaint on a variety of grounds. In an April
2020 entry order, the court rejected most of these grounds. It agreed, however, that the
complaint should be dismissed with prejudice under Vermont Rule of Civil Procedure 41(b)(2)
because the bank failed to comply with the January 2020 order referenced above. The court
found that while the bank filed a revised amended complaint within the required timeframe, the
only allegation related to the acceleration of the loan was the following paragraph: “As a result
of [defendants’] failure to make payments called for under the Note and Mortgage, the [bank]
elected to call due the entire amount secured by the Mortgage, as of the filing of the original
complaint on or about July 26, 2018.” The court considered the mere allegation that the bank
elected to accelerate the loan, without any specific facts related to the acceleration, clearly
insufficient to satisfy the prior order. It found that the new language also failed to show that the
bank complied with the terms of the mortgage note or deed, both of which required the bank to
give defendant Marjorie Johnston written notice of default and an opportunity to cure before
exercising any right to accelerate. The court noted that the bank had included language
concerning these requirements in its initial complaint. It found the omission of such allegations
in the revised amended complaint significant. The court found from the absence of this language
that the bank could not allege the specific facts required by the prior order because the bank had
failed to comply with the pre-acceleration notice requirements of the note and mortgage, which
were a precondition to filing for foreclosure. Given its analysis, the court dismissed the bank’s
complaint with prejudice.
Defendants filed a motion for reconsideration, asking the court to permanently bar the
bank from filing a future foreclosure action, which the court denied as incomprehensible.
The bank also moved for reconsideration, asking the court to reconsider the dismissal
“with prejudice.” It argued that dismissal with prejudice was not warranted because the court
had improperly inferred that the bank had not sent a notice of default in compliance with the note
and mortgage. The bank further argued that the additional pleading requirements were not clear
from the court’s January 2020 entry order. Finally, the bank asserted that the court exceeded its
discretion given the preference in the law for adjudication on the merits. The bank
simultaneously submitted a second motion to amend its complaint and a proposed second
amended complaint. It proposed to add a paragraph detailing the dates in which it provided
written notice of default to defendant Marjorie Johnston in compliance with the note and
mortgage and stated that Marjorie Johnston failed to cure the default and it attached copies of
two notices of default to its proposed second amended complaint.
In a July 2020 entry order, the court denied the bank’s motion for reconsideration. The
court found the January 2020 order clear and that the bank’s failure to comply with it obvious. It
stated that its order dismissing the complaint with prejudice “sanctioned the [bank] for previous
delays that the [bank] had caused in this case,” indicating that the bank’s failure to comply with
the January 2020 order “added another six months of delay in a case now two years old.” The
court stated that the bank had been sanctioned in the January 2020 order by being prevented from
recovering attorney’s fees or interest from the date it filed its complaint to the date of the court’s
January order because the bank had created delay in the case due to its error. Defendants
appealed and the bank cross-appealed.
Defendants’ opening brief appears to focus entirely on a response to the bank’s cross-
appeal rather than raising any challenge to the court’s dismissal order. Defendants refer to prior
cases apparently involving this bank or this property. The court made no reference to any such
case in reaching its decision in this case and there is no indication any of this information was

3
part of the record below. We therefore do not address these arguments. See V.R.A.P. 28(a)
(explaining that appellant’s brief must contain “concise statement of case” and “specific claims
of error, with appropriate reference to the record”); Johnson v. Johnson, 158 Vt. 160, 164 n.*
(1992) (stating that Supreme Court will not address contentions so inadequately briefed as to fail
to minimally meet standards of V.R.A.P. 28(a)). We reach a similar conclusion with respect to
defendants’ assertion that the court erred in denying their motion for reconsideration. This
argument is inadequately briefed and we do not address it. Defendants also appear to refer to the
merits of the bank’s ability to prove default, apparently including notice requirements. Given
our disposition of this case, it is unnecessary to consider the merits of the bank’s foreclosure
case.*
The bank argues on cross-appeal that the court should have dismissed its complaint
without prejudice rather than with prejudice. It asserts that this Court’s precedent clearly holds
that a failure to comply with a mortgage’s pre-foreclosure requirement of sending a notice of
default should result in a dismissal without prejudice. It complains that the trial court
retroactively labeled its decision a sanction to avoid this precedent. The bank argues that the
dismissal order did not indicate that the case was being dismissed with prejudice as a sanction
and it was not warned that sanctions could be imposed. It asserts that the January 2020 order did
not clearly require it to specify in its amended complaint that it sent a notice of default and
defendants failed to cure. It contends that defendants suffered no prejudice from the bank’s
misunderstanding of the January order.
Vermont Rule of Civil Procedure 41(b)(2) provides that an action or claim may be
dismissed on a defendant’s motion “[f]or failure of the plaintiff to prosecute or to comply with
these rules or any order of court.” “Unless the court in its order for dismissal otherwise
specifies, a dismissal under this subdivision (b) and any dismissal not provided for in this rule,
other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party
under [V.R.C.P.] 19, operates as an adjudication upon the merits.” V.R.C.P. 41(b)(3).
The trial court had discretion in deciding to dismiss this case with prejudice and we thus
review its decision for abuse of discretion. See Provident Funding Assocs., L.P. v. Campney,
2017 VT 120, ¶ 15, 206 Vt. 384 (explaining that Supreme Court reviews trial court’s “exercise of
its equitable authority,” which includes the imposition of sanctions, “for abuse of discretion”).
Other courts applying the analogous federal rule governing involuntary dismissals have
recognized that “[d]ismissal with prejudice is an extreme sanction and should be used only in
cases of willful disobedience of a court order or . . . persistent failure to prosecute a complaint.”
Rodgers v. Curators of Univ. of Mo., 135 F.3d 1216, 1219-20 (8th Cir. 1998) (quoting Givens v.
A.H. Robins Co., 751 F.2d 261, 263 (8th Cir. 1984)). As the Givens court explained, while trial
courts are entitled to “a large measure of discretion in deciding what sanctions are appropriate
for misconduct” given their familiarity “with proceedings before them and with the conduct of
counsel,” “the punishment should fit the crime, and not every instance of failure to comply with
an order of court, however inexcusable, justifies total extinction of a client’s cause of action.”
Givens, 751 F.2d at 263.
* Following oral argument, defendants filed a motion asking the Court to take judicial
notice of various matters in the record. We deny the motion to take “judicial notice” of these
matters but note that the Court has reviewed the record and is aware of its contents.

4
We conclude that the court abused its discretion in dismissing the bank’s case with
prejudice here. The court’s January 2020 entry order directed the bank to submit an amended
complaint that “specifies facts related to acceleration of the loan.” The bank did so. It
responded to the order and addressed facts related to acceleration by adding the following
paragraph to its complaint: “As a result of [defendants’] failure to make payments called for
under the Note and Mortgage, the [bank] elected to call due the entire amount secured by the
Mortgage, as of the filing of the original complaint on or about July 26, 2018.” The court was
not clear in its January 2020 order about what facts should be recited, and certainly not whether
notice was an issue for the court and that it expected the bank to address this issue in its amended
complaint or face dismissal as a sanction. Given the ambiguous order, the court erred in
considering the bank’s amended complaint unresponsive and worthy of a sanction of dismissal
with prejudice. As referenced above, the punishment did not “fit the crime.” Id. We thus
reverse and remand for an entry of dismissal without prejudice.
Reversed and remanded for entry of dismissal without prejudice.
BY THE COURT:
Beth Robinson, Associate Justice
Harold E. Eaton, Jr., Associate Justice
Karen R. Carroll, Associate Justice