Vermont Supreme Court Reverses Dismissal With Prejudice in Ditech v. Bisson

By Robert Wichowski, Esq.
Brock &Scott, PLLC*
USFN Member (AL, CT, DC, FL, GA, IN, KY, ME, MD, MA, MI, NH, NJ, NC, OH, PA, RI, SC, TN, TX, VT, WA, WV, Guam)

The Vermont Supreme Court, in Ditech v. Bisson (2025 VT 54), recently overturned a trial court’s dismissal with prejudice holding that the trial court abused its discretion. This matter stemmed from a foreclosure that began in 2015. In 2018, the plaintiff obtained judgment after a full evidentiary trial against an active defendant. The defendant appealed the entry of judgment of foreclosure.

In Vermont, a party must seek permission to appeal before the appeal will be accepted.  In this case, the defendant’s permission to appeal was denied. The defendant then filed for bankruptcy, which, along with the COVID-19 stays, stayed the case for quite some time. In 2023, the plaintiff filed a motion to substitute the current plaintiff, which was granted. The defendant then filed multiple motions to dismiss, which were all denied. In 2024, the defendant filed a motion to vacate the order substituting the new plaintiff, which, against objection, was granted by the court. The substance of the motion was that there was no apparent authority for the mortgage loan servicer to act in the name of the plaintiff due to Ditech’s bankruptcy.

The trial court held that although there was a power of attorney executed before judgment was entered, the power of attorney did not state who the real party in interest was in 2024, even though judgment was entered in 2018. Despite evidence submitted at the hearing to the contrary, the trial court held that the plaintiff failed to prove that it or the prior servicer exited the prior plaintiff’s bankruptcy with continued control over the judgment or loan.

The court rejected the plaintiff’s argument that Vermont Rule of Civil Procedure 25e permitted the action to continue with the original party because the original party no longer existed and dismissed the action with prejudice. Plaintiff sought permission to appeal, which was granted.

The Vermont Supreme Court, which is the only level of appellate jurisdiction in Vermont, held that the trial court abused its discretion in dismissing the case. In its opinion, the Court held that the dismissal in this case was similar to a sanction against the plaintiff and was not in fact a jurisdictional adjudication, which is the sole purpose of a motion to dismiss. Since the trial court made no findings that the plaintiff failed to pursue the case, caused delay, or demonstrated noncompliance with the court’s orders, nor did the plaintiff fail to attend any hearing or respond to any request from the court, the trial court abused its discretion in dismissing the case. The dismissal was reversed by the Vermont Supreme Court and the judgment was reinstated.

Typically, appellate courts give wide latitude to trial courts’ discretion, but this case shows clearly that foreclosing plaintiffs should not shy away from appealing trial court decisions when those courts fail to follow the law or accepted principles of jurisprudence. This case also shows the importance of creating an adequate record for appeal.

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