Opinion
20-P-1367
02-15-2022
ENDEAVOR CAPITAL NORTH, LLC, & another[1] v. STUART SMITH.
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such 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 23.0 or 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. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The defendant, Stuart Smith, appeals from a judgment entered in the Land Court in favor of Endeavor Capital North, LLC (Endeavor), and Ricochet Real Estate, LLC (Ricochet), declaring that Endeavor properly conducted a foreclosure under a power of sale, pursuant to G. L. c. 244, § 14, and a foreclosure by entry, pursuant to G. L. c. 244, § 1. We affirm.
Background.
We take the facts as found by the judge following the jury-waived trial, supplemented by the undisputed facts in the summary judgment record. See Denver St. LLC v. Saugus, 462 Mass. 651, 653 (2012).
In December 2012, Smith conveyed the property at 23 Londonderry Lane in Middleborough (property) to 23 Londonderry, LLC (23 Londonderry) by quitclaim deed. 23 Londonderry simultaneously granted a mortgage encumbering the property to Endeavor in the amount of $160,000. The mortgage was recorded in the Plymouth County registry of deeds on December 11, 2012. Thereafter, 23 Londonderry granted a second mortgage encumbering the property to Smith in the amount of $42,640, which was also recorded in the Plymouth County registry of deeds on January 3, 2013. A provision in the promissory note secured by the second mortgage permitted Smith to reside on the property until $20,000 of the mortgage principal was paid. At all relevant times, Smith resided in an "in-law" apartment above a garage next to the single-family home (house) on the property.
By April 2013, 23 Londonderry had defaulted on its mortgage payments to Endeavor. Thereafter, Endeavor sought to foreclose on the property and sent Smith notice of a foreclosure sale to the property's address by certified mail, return receipt requested, and regular mail. Smith did not receive either of the notices. The envelopes containing each of the notices were ultimately returned to sender as "not deliverable as addressed." The foreclosure sale was scheduled for June 28, 2013, at 1 P.M., and Endeavor had notice of the sale published in the local newspaper on June 6, June 13, and June 20, 2013.
Endeavor also sent notice to a representative for 23 Londonderry. The adequacy of the notice to the primary mortgagor is not at issue in this case.
At 1 P.M. on June 28, Smith was not home; however, several of the occupants of the house and their dog were inside the house at the time. Arriving at approximately 1 P_.M., Kurt Stenhouse, Endeavor's manager, Rosemary Traini, Endeavor's attorney, Paul Fortey, the auctioneer, and two potential bidders entered the property at the foot of the driveway. There, Fortey displayed the advertisement for the auction, planted his auction flag, read the memorandum of sale, and registered the two qualified bidders. He then opened the bidding, and Endeavor successfully bid $132,000 for the property. The auction concluded at 1:10 P.M.
During the auction, the family dog began barking loudly from inside the house, which caused Kerri Crosbie, one of the occupants of the house, to look out the window. She saw at least two cars on the street and went outside with her husband and child to investigate. Stenhouse, Traini, and Fortey walked up to the top of the driveway, where they engaged Crosbie and her husband and discussed the nature of their business there.
Each person's memory about the content of the conversation differed, but all agreed that a conversation on the property took place on June 28, 2013.
On July 18, 2013, Endeavor recorded a certificate of entry and a foreclosure deed in the Plymouth County registry of deeds. An affidavit of sale was attached to the foreclosure deed reciting the dates that notice of the sale was published in the local newspaper, the date and time of the foreclosure sale, and the successful bidder of the property. The affidavit, however, contained a scrivener's error that stated that the foreclosure sale occurred at 10 A.M. rather than 1 P_.M. An affidavit was later recorded correcting the scrivener's error to reflect that the sale in fact occurred at 1 £.M. Following the sale, Endeavor, by deed, conveyed the property to Ricochet, a related entity, and that deed was also recorded on July 18, 2013.
In July 2014, Ricochet sent the occupants of the property a notice to vacate, and all occupants but Smith vacated the property. Ricochet then brought two summary process actions in the Housing Court to evict Smith from the property, but those actions were dismissed on procedural grounds. Endeavor and Ricochet then filed this action in the Land Court seeking a declaratory judgment declaring that Endeavor complied with G. L. c. 244, § 14, in providing notice of the foreclosure sale to Smith, and that it properly foreclosed on the property by both entry and power of sale. Endeavor and Ricochet subsequently moved for summary judgment, which Smith opposed, and a Land Court judge concluded that Endeavor's notice of sale complied with the requirements of G. L. c. 244, § 14, despite the fact that Smith did not receive it, and that, because Smith did not challenge the foreclosure by entry within three years of recording of the certificate of entry, his right of redemption had been foreclosed and Endeavor's foreclosure by entry had ripened. The judge determined that there was a disputed issue of material fact whether the foreclosure sale in fact took place as described in the foreclosure affidavit, and a trial was held on that singular issue. Following trial, where the judge heard testimony from several witnesses, took evidence, and conducted a view of the property, the judge found that Endeavor properly conducted a foreclosure under a power of sale, pursuant to G. L. c. 244, § 14, and took title of the property by foreclosure deed. Consequently, judgment was entered in favor of the plaintiffs, Endeavor and Ricochet. Smith timely appealed.
Those actions were both dismissed because Ricochet failed to provide Smith with sufficient notice to vacate the property.
The parties agreed at the outset of trial that this was the sole issue to be tried.
Discussion.
1. Summary judgment issues.
We review de novo a grant of summary judgment to determine "whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law." Coviello v. Richardson, 76 Mass.App.Ct. 603, 607 (2010), quoting Siebe, Inc. v. Louis M. Gerson Co., 74 Mass.App.Ct. 544, 548 (2009).
a. Notice.
Smith argues that the foreclosure of the property is void because he did not receive notice of the foreclosure sale. The claim fails. The statute that governs foreclosure by power of sale does not require proof of receipt. See G. L. c. 244, § 14. "The fourteen-day registered mail notice requirement is satisfied by mailing and nonreceipt is irrelevant." Hull v. Attleboro Sav. Bank, 33 Mass.App.Ct. 18, 25 (1992). Here, it is undisputed that Endeavor sent notice of the foreclosure sale by certified and regular mail to Smith's registered address. Doing so satisfied the notice requirement of G. L. c. 244, § 14, and Smith's nonreceipt of such notice does not void the foreclosure sale. See Hull, supra.
Smith contends that second mortgagees should be entitled to greater notice than mortgagors, and as a result, he should have received actual notice of the foreclosure sale. Smith's problem, however, is that the statute does not make this distinction between notice to mortgagors and notice to second mortgagees, see G. L. c. 244, § 14, and "[w]e will not add words to a statute that the Legislature did not put there, either by inadvertent omission or by design." Daveiga v. Boston Pub. Health Comm'n, 449 Mass. 434, 442 (2007), quoting Commonwealth v. McLeod, 437 Mass. 286, 294 (2002).
At oral argument, Smith argued that, because the statute provides that junior lienholders "may waive at any time, whether prior or subsequent to the date of sale, the right to receive notice by mail," junior lienholders, including second mortgagees, are entitled to actual notice under the statute. G. L. c. 244, § 14. This argument was not raised in the trial court but was asserted for the first time at oral argument. As a result, the claim is unavailing; it is well established that "[w]e do not address arguments raised for the first time at oral argument." Santos v. U.S. Bank Nat'1 Ass'n, 8 9 Mass.App.Ct. 687, 700 n.14 (2016). That notwithstanding, we are not persuaded by Smith's assertion. The portion of the statute he references specifically applies to waiver of the notice requirement and not the form of the notice requirement itself.
b. Foreclosure by entry.
The statute that governs foreclosure by entry provides:
"A mortgagee may, after breach of condition of a mortgage of land, recover possession of the land mortgaged by an open and peaceable entry thereon, if not opposed by the mortgagor or other person claiming it, or by action under this chapter; and possession so obtained, if continued peaceably for three years from the date of recording of the [certificate of entry], shall forever foreclose the right of redemption."
G. L. c. 244, § 1. Thus, under the statute, a foreclosure by entry is effected "by the mortgagee's peaceable entry, proper filing of a certificate memorializing that entry, and passage of [three years]." Santiago v. Alba Mgt., Inc., 77 Mass.App.Ct. 46, 49-50 (2010). "The three-year holding period begins to run when the mortgagee records a proper memorandum or certificate of entry." Id. at 50. If a person claiming interest in the property "wants to challenge a foreclosure by entry, it is incumbent on him to do so before the three-year period has elapsed." Singh v. 207-211 Main St., LLC, 78 Mass.App.Ct. 901, 902 (2010). If the person claiming interest fails to do so, the right of redemption is "forever foreclose[d]," G. L. c. 244, § 1, and "the former mortgagee owns the legal and equitable interests in the property." Santiago, supra.
As stated supra, the certificate of entry was recorded on July 18, 2013. To be sure, Smith claims that he sufficiently challenged Endeavor's foreclosure by entry within three years of that date by challenging the validity of the foreclosure sale in the prior summary process actions that occurred in 2014 and 2015. In those prior actions, however, Smith did not challenge the foreclosure by entry; he challenged only the validity of the foreclosure sale. Foreclosure by power of sale and foreclosure by entry are two distinct means by which a foreclosure may be accomplished, and they carry their own distinct requirements. See Housman v. LBM Fin., LLC, 80 Mass.App.Ct. 213, 220 (2011). Notably, in the summary process actions, Smith argued that the foreclosure sale was invalid because he did not receive adequate notice of the sale. Even so, the notice that is required by G. L. c. 244, § 14, to conduct a foreclosure under a power of sale is not required to conduct a foreclosure by entry. See Wornat Dev. Corp. v. Vakalis, 403 Mass. 340, 346 (1988) (recording of certificate entry "is ample notice of the mortgagee's intent to foreclose by entry and possession").
Nothing in Smith's summary process pleadings can be construed as an argument that Endeavor failed to make entry on the property, or that its entry was not "open and peaceable." G. L. c. 244, § 1. See Thompson v. Kenyon, 100 Mass. 108, 111 (1868) ("entry is peaceable if not opposed by the mortgagor or person claiming the premises, and sufficiently open if made in the presence of two competent witnesses"). Indeed, in response to request for admissions, Smith admitted that his pleadings in the summary process actions did not challenge the validity of Endeavor's entry or the recording of the certificate of entry, but challenged only the validity of the foreclosure sale generally. Such a challenge was insufficient to disrupt Endeavor's peaceable possession. See Singh, 78 Mass.App.Ct. at 902-903 (summary process action, by itself, will not interrupt peaceable possession). Because Smith did not challenge the foreclosure by entry within the requisite three-year period, any right of redemption he possessed was "forever foreclose[d]," and Endeavor became the legal and equitable owner of the property when the three years expired in July 2016.
Although Smith argues that his characterization of the sale in his summary process pleadings as a "purported sale" sufficiently called into question the probability that a sale took place, a sale is not required for a successful foreclosure by entry. See G. L. c. 244, § 1.
2. Trial issues. a. Evidentiary claims.
"We review a trial judge's evidentiary decisions under an abuse of discretion standard." N.E. Physical Therapy Plus, Inc. v. Liberty Mut. Ins. Co., 466 Mass. 358, 363 (2013).
Smith first claims that the judge abused his discretion in admitting an e-mail exchange dated June 28, 2013, between Fortey and his employer reciting the details of the foreclosure sale. He contends that the e-mail exchange should have been excluded as self-serving and lacking proper foundation. We disagree. The judge properly concluded that the e-mail exchange was admissible under the business records exception to the hearsay rule, G. L. c. 233, § 78.
Under the business records exception, a writing or record shall not be inadmissible because it is hearsay or self-serving "if the judge finds that it was: (1) made in good faith; (2) made in the regular course of business; (3) made before the action began; and (4) the regular course of business to make the record at or about the time of the transaction or occurrences recorded." Beal Bank, SSB v. Eurich, 444 Mass. 813, 815 (2005). See G. L. c. 233, § 78. Here, before the e-mail exchange was admitted in evidence, Fortey testified that he authored the e-mail to his employer on the date of the foreclosure sale, and that it was his "standard practice" to do so after holding an auction. The judge found that the foundational elements for the business records exception had been satisfied, and thus the e-mail "is presumed to be reliable and therefore admissible." Commonwealth v. Fulgiam, 477 Mass. 20, 39 (2017), quoting Wingate v. Emery Air Freight Corp., 385 Mass. 402, 406 (1982). Upon review, we discern no abuse of discretion in the judge's decision to admit the e-mail exchange. See Beal Bank, SSB, supra ("G. L. c. 233, § 78, 'should be interpreted liberally to permit the receipt of relevant evidence'" [citation omitted]).
Smith next claims that the judge abused his discretion in excluding evidence of the value of certain improvements that the occupants made to the property sometime after the foreclosure sale had been conducted. Again, we disagree. At trial, Smith did not seek to elicit testimony concerning the value of the improvements made to the property. He sought only to admit evidence regarding the nature of those improvements. This he was permitted to do. Smith's argument on appeal is therefore waived. See Green v. Brookline, 53 Mass.App.Ct. 120, 128 (2001), quoting Wynn & Wynn, P.C. v. Massachusetts Commn. Against Discrimination, 431 Mass. 655, 674 (2000) ("'Objections, issues, or claims -- however meritorious -- that have not been raised' below, are waived on appeal"). Even assuming the argument was properly before us, the judge did not abuse his discretion in admitting evidence of the improvements made to the property, but excluding evidence of the value of those improvements because that evidence lacked relevance to the sole issue at trial, i.e., whether the foreclosure sale had taken place. See Harris-Lewis v. Mudge, 60 Mass.App.Ct. 480, 485 (2004) .
On direct examination, Smith asked Crosbie to describe the work that she had put into the property during the time that she had lived there, which triggered an objection from Endeavor's and Ricochet's attorney on relevance grounds. At sidebar, the judge asked counsel for Smith how the information he sought to elicit was relevant, and counsel suggested that it was relevant because it was unlikely that persons who believed their property had been foreclosed would put further work into it. The judge stated that counsel could "ask [Crosbie] what work they did, but [he did not] want to hear about the value of it." Counsel then informed the judge, "I won't ask the value. I just wanted the Court to understand the extent of the work."
Notably, some evidence of the value of improvements to the property was admitted without objection. Prior to asking what improvements Crosbie had made to the property, Smith asked her to describe the conversation that she had had with Stenhouse on June 28. She testified that she told Stenhouse that she had put approximately $20,000 into the property at that point.
b. Foreclosure sale.
Smith contends that the judge erred in finding that a foreclosure sale took place on the property on June 28, 2013. We are not persuaded.
To the extent Smith's argument can be construed as a claim that the evidence at trial was insufficient to prove by a preponderance of the evidence that a foreclosure sale took place, "[i]t is an established rule that an appellate court cannot review the sufficiency of the evidence in the absence of an effective motion for a directed verdict." Motsis v. Ming's Supermkt., Inc., 96 Mass.App.Ct. 371, 382 (2019), quoting International Fid. Ins. Co. v. Wilson, 387 Mass. 841, 846 (1983) .
We accept the judge's findings of fact unless they are clearly erroneous. See Mass. R. Civ. P. 52 (a), as amended, 423 Mass. 1402 (1996). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Kendall v. Selvaggio, 413 Mass. 619, 620-621 (1992), quoting J.A. Sullivan Corp. v. Commonwealth, 397 Mass. 789, 792 (1986). "In applying the 'clearly erroneous' standard, rule 52 (a) requires that 'due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.'" Demoulas v. Demoulas Super Mkts., 424 Mass. 501, 509 (1997), quoting Mass. R. Civ. P. 52 (a). "[T]he judge, who has a 'firsthand view of the presentation of evidence, is in the best position to judge the weight and credibility of the evidence.'" Demoulas, supra at 509-510, quoting New England Canteen Serv., Inc. v. Ashley, 372 Mass. 671, 675 (1977).
Smith's primary contention is that the judge should not have credited Fortey's or Stenhouse's testimony that a foreclosure sale occurred on June 28, in light of Crosbie's testimony that the family dog barked whenever a visitor approached the property, and that when she investigated his barking on this particular date, she did not witness an auction taking place. The judge, however, found that the family dog did bark while the sale was taking place on June 28, but that by the time Crosbie went out of the house to investigate, the foreclosure sale had concluded. This was not an unreasonable view of the evidence. See Demoulas, 424 Mass. at 510. It is the judge's role to make credibility determinations in a jury-waived trial, and "[w]here there are two permissible views of the evidence, [the judge's] choice between them cannot be clearly erroneous." Id., quoting Gallagher v. Taylor, 26 Mass.App.Ct. 876, 881 (1989).
Smith also argues that, in exercising the power of sale, Endeavor breached its duty to act with good faith and reasonable diligence. See Pehoviak v. Deutsche Bank Nat'1 Trust Co., 85 Mass.App.Ct. 56, 61 (2014). Here again, Smith did not raise the argument in his opposition to the motion for summary judgment or at trial. He argued instead that the foreclosure was not conducted in accordance with G. L. c. 244, § 14, which was insufficient to preserve the breach of good faith and reasonable diligence issue for appeal. See Id. ("compliance with G. L. c. 244, § 14, and the duty to act with good faith and reasonable diligence are two distinct issues"). The issue is thus waived.
Judgment affirmed.
Neyman, Desmond & Hershfang, JJ.
The panelists are listed in order of seniority.