In Deutsche Bank v. Kevin Pinette, 2016 VT 71 (June 24, 2016), the Vermont Supreme Court affirmed the superior court’s decision granting Pinette’s motion to dismiss due to claim preclusion.
Issue: Deutsche Bank filed three complaints against Pinette that were virtually identical. All three had three counts: one for mortgage foreclosure, one for judgment on a $54,400 promissory note, and a deficiency judgment. In the first complaint, Pinette did not appear or file an answer. Deutsche Bank asked for two extensions of time to obtain a judgment, both of which expired before a settlement could be met. As such, that action was dismissed without prejudice. The second action was dismissed after Deutsche Bank failed to file a motion for default judgment, but there was no explicit statement in the dismissal as to whether it was with or without prejudice. After Deutsche Bank filed its third action, Pinette filed an appearance and an answer, ultimately filing a motion to dismiss due to claim preclusion. The superior court granted the motion, finding that the action was barred by the dismissal of the second action. Deutsche Bank appealed, arguing that since the second action did not “adjudge the enforceability of the note and mortgage, the dismissal did not have preclusive effect.” Deutsche Bank also argued that dismissals with prejudice should not prevent subsequent actions in a mortgage foreclosure if there are new defaults.
Holding: The Court affirmed the superior court’s dismissal, finding that Pinette’s answer and motion to dismiss were not untimely. The Court also found that under Rule 41(b), the second dismissal, based on Deutsche Bank’s failure to ask for a default judgment, functioned as an adjudication on the merits. On the new default theory, the Court found that Deutsche Bank failed to present it in the trial court and did not preserve it for appellate review. Finally, the Court noted that Deutsche Bank had 75 pending cases in Vermont, and as such, should have been aware of the procedural rules and its obligations under them. The fact that Deutsche Bank filed three identical complaints, according to the Court, suggested that “it expected no consequences from its default.”