Opinion
11-P-173
01-24-2012
469 CORP. v. EDWARD COSTA & another.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff appeals from a decision of a judge of the Superior Court allowing the summary judgment motion of the defendants, Edward Costa and Costa Management, LLC (Costa Management). The plaintiff contends the motion judge erred in considering improperly authenticated documents offered by the defendants in violation of Mass.R.Civ.P. 56(e), 365 Mass. 824 (1974), and also in awarding summary judgment while disputed issues of material fact remained. We affirm.
The record appendix supports the defendants' contention that there was no objection below to the authentication of the documents the motion judge considered. For example, according to the defendants' statement of material facts and the responses of the plaintiff thereto, signatures of Sandra Stebenne on various documents were admitted as true, the plaintiff denying only that the documents were 'executed freely, willingly, and voluntarily with knowledge of [their] contents and legal ramifications.' The plaintiff's argument is therefore waived, and it was open to the judge to consider the documents. See Wooster v. Abdow Corp., 46 Mass. App. Ct. 665, 666 (1999). In addition, the affidavit of Edward Costa, containing many statements that were clearly being made from his personal knowledge, also averred that the statements in the documents supporting summary judgment were true to the best of his knowledge and belief.
We decline the defendants' request to make a declaration as to the summary process claim, as the matter is best addressed in the first instance in the trial court.
The overarching contentions set forth by the plaintiff are that the defendants acquired property in Swansea, Massachusetts originally owned by the plaintiff (the locus) through ignorance, misrepresentation, or mistake. Specifically, the plaintiff alleges that its principals (Sandra and Kenneth Stebenne) signed a series of documents in 2005 resulting in a conveyance of which they were unaware. In fact, by signing these documents, the plaintiff effectively transferred the locus and entered into a lease with defendant Edward Costa, contrary to the plaintiff's understanding that it had entered into a private financing agreement with the defendant and had retained ownership of the locus.
The plaintiff's complaint is in seven counts, alleging that the defendants are barred from recovery due to the unenforceability of the contracts because of the lack of consideration, usury, negligent and intentional misrepresentation, undue influence, mistake of fact and law, and violation of G. L. c. 93A.
Factual background. Having defaulted on its mortgage and in the face of a looming foreclosure by its bank lender, the plaintiff faced serious financial uncertainty in 2005. After consulting with the plaintiff, its attorney introduced the plaintiff to defendant Edward Costa, another of his clients. This same attorney in turn proposed the sale and leaseback of the locus, the transaction that the plaintiff claims was described as a financing arrangement. Ultimately, the plaintiff's original attorney withdrew from representing either party at the closing, due to his prior involvement with both parties. Represented by new counsel, the plaintiff proceeded to execute the closing documents.
Sandra Stebenne and the plaintiff were guarantors of the promissory notes owed to the bank, and Kenneth Stebenne also guaranteed a portion of the indebtedness of the plaintiff. Under a second amendment to a forbearance agreement, the plaintiff was given until January 31, 2005, to pay all indebtedness to the bank, or the foreclosure would proceed.
As part of this transaction, the plaintiff received the right to repurchase the locus. The plaintiff did not exercise the option to purchase. The plaintiff thereafter filed suit, which was ultimately consolidated with Costa Management's action to repossess the locus due to the plaintiff's failure to make scheduled lease payments.
The plaintiff points out that the 2005 deed was not recorded until 2009, but this view fails to take into consideration the fact that in 2005, in addition to the pending foreclosure, an attachment in the amount of $750,000 was on record concerning an unrelated personal injury action which was not substantially resolved until February, 2009.
In 2009, even though the time for the option had arguably passed, Edward Costa gave the plaintiff one last chance to repurchase the locus.
Discussion. 'A court must deny a motion for summary judgment if, viewing the evidence in the light most favorable to the nonmoving party, there exist genuine issues of material fact.' Maxwell v. AIG Domestic Claims, Inc., 460 Mass. 91, 97 (2011), quoting from Locator Servs. Group, Ltd. v. Treasurer & Receiver Gen., 443 Mass. 837, 846 (2005). See Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404 (2002). 'An order granting or denying summary judgment will be upheld if the trial judge ruled on undisputed material facts and his ruling was correct as a matter of law.' Maxwell, supra, quoting from Commonwealth v. One 1987 Mercury Cougar Auto., 413 Mass. 534, 536 (1992).
Viewing the record evidence in the light most favorable to the plaintiff, the judge ruled that the plaintiff's principals signed a series of documents that clearly denoted their nature as conveyances. As such, the conveyance was not fraudulent.
In Massachusetts, '[t]he general rule is that, in the absence of fraud, one who signs a written agreement is bound by its terms whether he reads and understands it or not.' Canney v. New England Tel. & Tel. Co., 353 Mass. 158, 165 (1967), quoting from Cohen v. Santoianni, 330 Mass. 187, 193 (1953). 'A party seeking recovery for a unilateral mistake must present full, clear, and decisive proof that a mistake occurred . . . and that the other party knew or had reason to know of the mistake.' Nissan Autos. of Marlborough, Inc. v. Glick, 62 Mass. App. Ct. 302, 306 (2004).
Here, the judge correctly applied the legal principles set forth above in determining that the plaintiff should have been aware of the nature of the documents signed. Notwithstanding the fact that Edward Costa's assumption of the plaintiff's mortgage constituted the price paid for the locus, each of the documents signed by the plaintiff contains explicit language evidencing the underlying nature of the document as a conveyance of the locus rather than, as the plaintiff argues, Edward Costa's taking over the role of lender on the plaintiff's mortgage. See, e.g., the 'PURCHASE AND SALE AGREEMENT' dated February 16, 2005, which Sandra Stebenne signed as 'SELLER' and Edward Costa signed as 'BUYER'; the 'QUITCLAIM DEED' dated February 25, 2005, which she signed as President and Treasurer (containing a notarization that she 'signed it voluntarily'); and an 'AGREEMENT' dated February 25, 2005, which both she and Kenneth signed as 'LESSEE[s],' beneath the signature of Edward Costa as 'LESSOR.' Moreover, following the plaintiff's receipt of the February, 2007, letter from Costa's attorney informing the plaintiff that it was in breach of the lease agreement, Sandra Stebenne sent a check in the amount of $200,000 to the attorney.
Contemporaneously with the closing, Ana Costa, a nonparty and wife of the defendant Edward, purchased the mortgage from the bank for the principal balance owed of $462,908.34.
While fraud is a well-carved out exception to the general rule that a party to a contract is charged with notice of the contract terms, see Sound Techniques, Inc. v. Hoffman, 50 Mass. App. Ct. 425, 429 (2000), the judge in the instant case correctly distinguished the plaintiff's claim. The motion judge found that the plaintiff's claim depended upon the allegation of an antecedent oral representation by Costa or his attorney as to a financing arrangement that did not involve a sale and lease back. He further found, and we agree, that the 'oral representation was contradicted by the plain nature of the purchase and sale agreement and deed which, as previously indicated, clearly expressed an intent that Costa become the owner of the property and not a mortgagee.' Citing Masingill v. EMC Corp., 449 Mass. 532, 541 (2007), the motion judge observed that, in 'such a conflict between the writings and the alleged antecedent, [the] oral misrepresentation [cannot support] an action for fraud [absent] a showing of reasonable reliance.' In Masingill, the court stated a long-standing rule that '[i]t is unreasonable as a matter of law to rely on prior oral representations that are (as a matter of fact) specifically contradicted by the terms of a written contract.' Ibid.
Application of the foregoing principles clearly shows the absence of genuine issues of fact material to the plaintiff's claims based on lack of knowledge and misrepresentation. We agree with the judge that the plaintiff has not established a basis in the motion record for its claim of unilateral mistake to go forward. The plaintiff has again failed to provide evidence of genuine factual issues material to this cause of action.
In sum, we agree with the judge's decision rejecting the plaintiff's claim that the transactions at issue are unenforceable 'due to ignorance, misrepresentation [or] unilateral mistake.'
Judgment affirmed.
By the Court (Kantrowitz, Fecteau & Carhart, JJ.),