Caribou couple sue bank, real estate company over foreclosure and flooding

CARIBOU, Maine — A couple is suing a Caribou bank and real estate company, among others, for allegedly conspiring to foreclose on their home illegally and causing water damage that prevented it from being sold.

David and Sandy Marrett, who live in East Longmeadow, Massachusetts, are seeking undisclosed compensatory damages for financial losses and emotional distress as well as punitive damages and legal punishment for the defendants.

In 2021, the Marretts fell 75 days behind on mortgage payments for the home they own at 35 York St. in Caribou after David was diagnosed with cancer, according to the lawsuit filed in U.S. District Court in Bangor on Aug. 23.

The couple informed their bank, Aroostook County Federal Savings & Loan in Caribou, of the situation, and said they intended to convert the two-story home into a two-family residence to generate more income and catch up on mortgage payments.

The Marretts, who are representing themselves, claim that the bank prematurely began foreclosure on the home in violation of the federal Real Estate Settlement Procedures Act, according to court documents. The law bars financial institutions from initiating foreclosure until after borrowers are 120 days late on mortgage payments.

In Oct. 2021, the Marretts decided to sell their home after being unable to resolve the defaulted loan or obtain legal representation. They hired Cathy Duffy of Progressive Realty in Caribou to manage the sale, according to court documents.

Two weeks later, Aroostook Savings & Loan offered the Marretts a deed in lieu of foreclosure and Duffy stated that she would resolve the matter with the bank, the lawsuit claims. A deed in lieu of foreclosure allows a homeowner to transfer their property title to the mortgage lender in exchange for being released from the mortgage.

The bank’s Caribou branch manager, Beth Henderson, allegedly pressured the Marretts to accept the deed in lieu of foreclosure, according to the lawsuit. The Marretts refused.

The Marretts allege that Duffy and Henderson did not reveal that Henderson also works for Progressive Realty, and that they conspired to strip the plaintiffs of their property rights in order to profit from the sale of the home without the Marretts’ knowledge or consent.

Henderson is listed as a sales agent on Progressive Realty’s website . She and Duffy did not respond to requests for comment on Tuesday.

The Marretts allege that Aroostook Savings & Loan took over maintenance of the home and restored water and oil delivery services, which the couple had previously stopped, and forwarded all water bills from Caribou Utilities District to the bank without their knowledge.

Six months later, in May 2022, Sandy Marrett’s mother went to check on the house but could not get in because her key no longer worked. She heard running water and called Caribou Utilities District, who shut off the water.

After learning of the situation from her mother, Sandy Marrett traveled to Caribou and allegedly found that 1.8 million gallons of water had flowed through the property over a period of months, causing extensive damage, according to the lawsuit.

The Marretts have also sued Zurich Insurance Company of Illinois, Waterville-based law firm Marden, Dubord, Bernier and Stevens, P.A.; Portland, Maine-based law firm Monaghan Leahy, LLP; Penobscot Superior Court Justice Bruce Mallonee; and Caribou attorney Richard Solman.

After the flooding at 35 York, the Marretts filed a claim with Zurich Insurance but the company later closed the claim without giving a reason, the lawsuit states. Then Aroostook Savings & Loan allegedly opened a claim in their name, using the bank’s address, without their permission, according to court documents.

The insurance company’s attorneys at Marden, Dubord, Bernier and Stevens supposedly harassed the Marretts and attempted to persuade them to withdraw a counterclaim against Aroostook Savings & Loan.

The Marretts allege that in 2023 Mallonee failed to correct attorneys who claimed their counterclaim was illegal and then denied a revised counterclaim after an error naming Aroostook Savings & Loan as the plaintiff was fixed.

In Oct. 2023, Solman allegedly told the Marretts that an insurance claim had been filed on their behalf even though that proved to be untrue, according to the lawsuit.

During a Dec. 2023 hearing concerning the Marretts’ claims, Mallonee upheld Aroostook Savings & Loan’s pursuit of the foreclosure. The Marretts then filed a motion for a judgment on their original counterclaim against the bank, which Mallonee denied in July.