Milfoil and Mortgages

This is 100% true

By Andy Delaney

November 7 brings us two cases. Both having something to do with property law and standing. Our first case takes place on Vermont's largest intrastate lake. 

Lake Bomoseen. Milfoil. Pesticides. Standing. Hang onto your hats. It's about to get wild.  

Milfoil is a pain. It's invasive and causes problems in lakes (and other waters). One of the ways folks try to control it is with pesticides. A group of entities at Lake Bomoseen applied for a pesticide spraying permit. Said permit was denied.  

Enter Mr. Waterhouse. He is no stranger to the lake—family ties, recreational interest, and a background in environmental engineering. When the state said "nope" to the milfoil-sprayin' request, Mr. Waterhouse tried to appeal, though the original permit applicants didn't join him. The Environmental Division looked around and said, "Umm. Where're the applicants?" They were nowhere to be found, and Mr. Waterhouse's board membership (on one of the applicant entities) and enthusiastic support of the application wasn't enough to make up the difference. There was an attempt to have Mr. Waterhouse represent one of the applicant organizations (presumably by that organization) but the trial court didn't bite. Importantly, the organization does not appeal. 

The trial court figured Mr. Waterhouse lacked standing. Enjoying the lake and wishing it free of milfoil does not a particularized injury make. Standing requires some specific harm and here, Mr. Waterhouse showed no special harm. 

Mr. Waterhouse appeals. 

SCOV affirms. Because the parties who actually sought the permit didn't appeal, there ain't no (I love that phrase, sorry) live case nor controversy for SCOV to resolve. Mr. Waterhouse attempts to raise the I-shoulda-been-able-to-represent-the-association-as-a-nonattorney-representative issue, but SCOV does not take that lure (I'll stop), reasoning that Mr. Waterhouse lacks standing to appeal on that issue because the organization (see foreshadowing above) did not appeal. 

Standing is always important and without it, Mr. Waterhouse does not pass "GO." This one gets affirmed. In re Lake Bomoseen Association, 2025 VT 59.  

Turning to our second case this week, we get into mortgage, foreclosure, and proper note taking (which is hopefully the last dopey pun I'm making this post). 

The Bank of New York Mellon foreclosed on Mr. Quinn’s Woodstock property after Mr. Quinn defaulted on his loan. The bank thought it was straightforward—it said it held the note and mortgage. But the complaint attached a copy of the note that wasn't indorsed. The case meandered for few years with mediation, bankruptcy, and a trip to SCOV and back again. 

Fast-forward to the merits hearing, where the bank produced an original note with an indorsement in blank, but couldn't show when it became the "holder" of the note. This is, as the kids say, "kind of a big deal."

The trial court reasoned that a plaintiff must be a holder of the note at the time of filing. Later possession of holder status won't cure the problem. There's a case about that problem (summarized here). The bank argued that case was wrong or should be limited, and maybe—just maybe—a "real party in interest" could be substituted instead of outright dismissal. The trial court was not looking for such creative solutions, held that the plaintiff bank lacked standing, and entered judgment for the defendant.

Bank appeals. 

SCOV affirms. Standing—in the context of a Vermont foreclosure—means showing you can enforce the note when the suit begins. Not later, not eventually. 

Judicial economy is one of two correct answers in law, the other being "it depends." Here, if any ol' bank can bring suit without showing it's entitled to bring the lawsuit, then multiple lawsuits or liability could follow, which is bad news for borrowers and courts alike. Judicial economy is therefore a correct answer. 

SCOV is not interested in overruling the controlling case, tweaking the rules, or granting retroactive exceptions, and sees no reason to change course. The bank attempts a substitution-under-the-real-party-in-interest-rule argument, and while SCOV briefly entertains the notion—long enough to note its implausibility—SCOV ultimately concludes that the bank failed to preserve that argument.

And here's where "it depends" comes into play. The bank wanted the judgment to be "without prejudice" in case it wants to come back for seconds. The trial court reasoned that future courts could figure that out. SCOV agrees. Whatever preclusion questions there are remain for another day. The Bank of New York Mellon v. Quinn, 2025 VT 60.