Opinion
14-P-1863
01-28-2016
SANTANDER BANK, N.A. v. WELLESLEY CAPITAL CORPORATION & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its 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 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 1:28
Defendant Robert Buonato appeals from the judgment entered following allowance of the motion for summary judgment of the plaintiff Santander Bank, N.A. (bank). After de novo review, see Go-Best Assets Ltd. v. Citizens Bank of Mass., 463 Mass. 50, 54 (2012), we affirm.
Background. The following facts are uncontroverted. On August 29, 2005, defendant Wellesley Capital Corporation (WCC) executed a promissory note in favor of the bank for $8 million (later increased to $12 million), as well as an agreement for a revolving line of credit. At the same time, Buonato signed a limited guaranty agreement, guaranteeing some of WCC's obligations. As security, WCC, which was in the business of lending money to small real estate developers, granted the bank conditional assignments of debts owed by the third-party developers to WCC.
When the amounts owed under WCC's note and revolving line of credit became due on August 31, 2010, WCC and Buonato did not make full payment. Eventually, in July, 2011, the bank, WCC, and Buonato entered into a forbearance and settlement agreement that extended the maturity of the original loans to August 31, 2011. As part of the forbearance agreement Buonato executed an amended guaranty for the full amount owed by WCC.
On August 31, 2011, WCC and Buonato again failed to make full payment. Approximately one year later, on August 24, 2012, the bank issued notice to the collateral debtors to make all further payments to the bank, and began the process of trying to collect those debts. However, despite taking the steps detailed in an affidavit by Bret Bokelkamp, a bank vice-president, this endeavor resulted in only limited success. Meanwhile, on August 10, 2012, Buonato transferred his half interest in real property in Weston into a realty trust for consideration of one hundred dollars. The property had an assessed value of $1.7 million and was encumbered by $900,000 in mortgages.
The bank filed the instant action on September 12, 2012. Relevant here, it alleged that Buonato was liable, as guarantor, for more than $8 million, and that the bank was entitled to reach Buonato's interest in the Weston property because his conveyance to the trust was a fraudulent transfer. On November 18, 2013, as a result of Buonato's failure to provide discovery, a judge imposed sanctions upon him, including a conclusive finding that, at the time of the transfer, he was insolvent within the meaning of the fraudulent conveyance statute, G. L. c. 109A.
Discussion. 1. Impairment of collateral debts. Buonato argues that genuine issues of material fact remain concerning the commercial reasonableness of the bank's collection efforts on the collateral debts, and that he should be allowed to prove this defense and mitigate his damages at trial. However, on the basis of the summary judgment record, no reasonable fact finder could conclude that the bank impaired the value of the collateral debts. The Bokelkamp affidavit describes the bank's collection efforts in detail, explaining that many debtors had become insolvent or defunct, or already had been foreclosed upon by a senior lender. Buonato's general, conclusory allegations to the contrary do not create a genuine issue of material fact. See Mass.R.Civ.P. 56(e), 365 Mass. 824 (1974). See also Ng Bros. Constr., Inc. v. Cranney, 436 Mass. 638, 648 (2002).
Under the relevant agreements, the bank could be liable only for collection efforts reflecting wilful misconduct, bad faith, or gross negligence. Buonato has made no showing whatsoever that would support such findings.
2. Fraud in the inducement. Buonato argues that he was fraudulently induced into entering into the forbearance agreement and amended guaranty by false assurances from the bank that the collateral debts would be liquidated cooperatively over a period of years. This argument is without merit. Buonato waived this defense by failing to raise it as an affirmative defense in his answer to the complaint. See Sharon v. Newton, 437 Mass. 99, 102 (2002). Furthermore, Buonato's affidavit in opposition to the bank's motion for summary judgment fails to recite the particulars required to proceed on a claim of fraud. See Equipment & Sys. for Indus., Inc. v. Northmeadows Constr. Co., 59 Mass. App. Ct. 931, 931-932 (2003).
3. Request for further discovery. Buonato claims that the trial court judge erred in denying the defendants' motion to defer resolution of the summary judgment motion until further discovery was completed. However, in light of the history of delays and obstruction in this case and the failure of the motion to comply with the requirements of Mass.R.Civ.P. 56(f), the judge was well entitled to rule as he did.
4. Fraudulent transfer. As Buonato failed to raise any arguments addressing the bank's fraudulent transfer claim in opposition to the bank's motion for summary judgment, he has waived his right to do so on appeal. See Department of Rev. v. Estate of Shea, 71 Mass. App. Ct. 696, 700-701 (2008). In any event, however, contrary to Buonato's newly asserted contention on appeal, the bank was entitled to summary judgment on its fraudulent conveyance count even if there existed a genuine issue of material fact as to Buonato's intent to defraud. Under G. L. c. 109A, § 6(a), his conveyance into the trust was a fraudulent transfer as a matter of law, based on the conclusive finding that Buonato was insolvent at the time he transferred his interest in the Weston property, together with other undisputed facts as to the timing of the transfer and the amount of consideration. Compare G. L. c. 109A, §§ 5(a)(1) and 5(a)(2)(ii).
We note that the judgment entered on September 11, 2014, recites that the conveyance was a fraudulent transfer within the meaning of "G. L. c. 109A, §[§] 5(a)(1), 5(a)(2)(ii), and/or 6(a)" (emphasis supplied). While it may have been preferable to refer only to the applicable section, § 6(a), the judgment is correct by virtue of the use of the disjunctive. The references to the subsections of § 5 are harmless surplusage that do not detract from the validity of the judgment.
Judgment affirmed.
By the Court (Cohen, Grainger & Wolohojian, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: January 28, 2016.