Opinion
No. 12–P–1750.
2013-05-16
David B. KAPLAN v. Paul J. SALVADOR & others.
By the Court (RUBIN, FECTEAU & HINES, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
On March 28, 2012, summary judgment entered in favor of the plaintiff, David B. Kaplan, thereby rendering the defendants, Paul J. Salvador, Walter W. Salvador, Ernest A. Enos, Jr., and John P. Horan, liable to the plaintiff on two promissory notes. Following a hearing, a second judge of the Superior Court assessed damages in the amount of $673,894.20. On appeal, the defendants argue that the motion judge improperly weighed the evidence on summary judgment. They also argue that the second judge wrongly denied them a jury trial on damages. We affirm.
The defendants executed and delivered to the plaintiff two promissory notes totalling $220,000, which the defendants failed to repay according to the terms of the loans. The underlying debt was secured by a commercial fishing vessel, the Laila 1, which has since been lost at sea or otherwise rendered valueless. The defendants do not dispute either their failure to repay or the loss of the Laila 1. On February 22, 2011, the plaintiff commenced the present action, but later lost or misplaced the original notes.
In order to meet his burden of proof, he accordingly filed an affidavit under G.L. c. 106, § 3–309( a ),
Copies of the loan agreements were attached to the plaintiff's verified complaint.
indicating that the original notes were lost while in his possession and while he was entitled to enforce them, that the loss was not due to a transfer by him or seizure by a third party or entity, that the notes “have not been attached, transferred, hypothecated, endorsed, pledged or assigned to any person or entity,” and that he could not reasonably obtain possession of the instruments because their whereabouts could not be determined.
.General Laws c. 106, § 3–309( a ), inserted by St.1998, c. 24, § 8, provides: “A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.”
The plaintiff thereafter moved for summary judgment as to liability. The defendants opposed the motion, arguing that the loss of the notes gives rise to an “inference” that the instruments were transferred, thus creating a genuine issue of material fact. See G.L. c. 106, § 3–309( b ), inserted by St.1998, c. 24, § 8 (“The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument”). The motion judge disagreed, and allowed the motion for summary judgment, noting that the defendants had “point [ed] to no fact or set of facts to even suggest that such a transfer was actually made,” in contravention of the affidavit submitted by the plaintiff. Following a hearing, the second judge assessed damages in the amount of $673,894.20 plus attorney's fees. On appeal, the defendants renew the argument made below. They also argue that the motion judge failed to adequately consider their affirmative defenses of mitigation and laches, and that they were entitled to a jury trial on the issue of damages.
1. Inference of transfer. The defendants claim that an inference of transfer necessarily arises because both of the notes contain language stating that the lender may transfer the note to “his heirs.” The defendants accordingly argue that a trial is necessary to test the plaintiff's credibility in asserting that the instruments were actually lost, rather than transferred. The claim has no merit.
As below, the defendants here point to nothing in the record specifically contradicting the plaintiff's affidavit, and have submitted no affidavits or other evidence in support of their claim. Rather than an inference, their argument amounts to pure speculation that a transfer occurred. See Benson v. Massachusetts Gen. Hosp., 49 Mass.App.Ct. 530, 532 (2000) (speculation and bare assertions cannot defeat a motion for summary judgment).
2. Mitigation and laches. Concerning mitigation, the defendants argue that, under the language of the notes, the plaintiff was required to look to the collateral, the Laila 1, before proceeding on the defendants' guarantees. Again, the claim has no merit.
First, the plaintiff is correct that the language of the notes makes no such requirement. Rather, each note states, without qualification, that “[e]ach [defendant] is fully and personally obligated to pay the full amount owed.... The Note Holder may enforce his rights ... against each of us individually or against all of us together.”
Second, in Massachusetts and under the Uniform Commercial Code, “a secured party has the choice of instituting an action on the debt without first looking to the security interest.” Acushnet Fed. Credit Union v. Roderick, 26 Mass.App.Ct. 604, 608 (1988). See G.L. c. 106, § 9–601. Lastly, it is undisputed that the Laila 1 was lost at sea, and therefore unrecoverable in any event.
The defendants' arguments concerning the delivery of the bill of sale of the Laila 1 do not alter the plaintiff's rights under the language cited above.
As for laches, the defendants have made no showing of unreasonable, unjustifiable, or prejudicial delay. There was no error.
3. Jury trial on damages. The defendants argue that the second judge erred in denying their application for a jury trial on damages, specifically, attorney's fees. We need not decide this question as this aspect of damages is no longer disputed. The plaintiff waived his claim for attorney's fees in his brief and at oral argument.
The portion of the judgment awarding attorney's fees is vacated. The judgment is otherwise affirmed.