Home ANTHONY COLARUSSO [Note 1] and others [Note 2] v. RICHARD BARAS and another [Note 3]

2016 Mass. App. Div. 33

October 30, 2015 - April 1, 2016

Appellate Division Northern District

Court Below: District Court, Cambridge Division

Present: Swan, P.J., Coven & Singh, JJ.

James E. Gallagher and Samuel B. Moskowitz for the plaintiffs.

John S. McNichols for defendant HSBC Bank USA, N.A.


SINGH, J. This is an action to enforce a condominium lien for common expenses, with a six-month lien priority, pursuant to G.L. c. 183A, § 6(c). In November, 2013, plaintiff Trustees of Brookside Condominium Trust ("Brookside") brought this action against unit owner Richard W. Baras ("Baras"), alleging that he owed common expenses between April, 2012, and November, 2013. The suit sought to establish a lien against the unit, with a priority as to the assessments that came due in the six months prior to suit and attorney's fees and costs involved in bringing suit. As the first mortgagee on Baras's unit, defendant HSBC Bank USA, N.A. ("HSBC") was named as a party in interest. In January, 2014, after Baras's default, HSBC tendered to Brookside payment representing common expenses in the six months preceding suit ($1,536.00), attorney's fees and costs ($3,711.75), and additional amounts agreed to by the parties, for a total of $5,759.75. In so doing, HSBC sought to foreclose Brookside's claim to any lien priority, and thereby avoid a sale of the property.

Later that month, Brookside amended its complaint, alleging that it maintained a lien priority with respect to attorney's fees associated with its continuing efforts to collect the nonpriority amount of the lien. It moved for a default judgment as to Baras. On July 28, 2014, the court allowed the motion and judgment entered in favor of Brookside and against Baras in the amount of the balance of the lien ($4,335.00), attorney's fees and costs ($7,548.00), and interest and court costs, for a total of $13,101.00. On September 5, 2014, [Note 4] the court issued an order and judgment that declared that the attorney's fees and costs portion of the judgment had lien priority over HSBC's

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first mortgage and authorized sale of the property in order to satisfy the lien. HSBC appealed.

The question on appeal is whether a first mortgagee's payment of the lien priority amount, plus accrued attorney's fees and costs, extinguishes the organization of unit owners' lien priority, as HSBC claims, or whether the lien priority remains until the first mortgagee agrees to pay all future common expenses, as Brookside claims. The answer depends on review of the condominium lien enforcement statute, G.L. c. 183A, § 6.

Section 6(a)(1) of that statute declares that the organization of unit owners "shall have a lien on a unit for any common expense assessment levied against that unit from the time the assessment becomes due." Section 6(c), second par., further provides that this lien is prior to a first mortgage on the unit to the extent of common expense assessments due in the six months immediately preceding suit "and to the extent of any costs and reasonable attorneys' fees incurred in the action to enforce the lien." Thus, the statute secures to the organization of unit owners a six-month lien priority, plus associated costs and fees, over a first mortgage.

The statute goes on to explain the steps that must be taken to enforce the lien. When a unit owner's payment of common expenses has been delinquent for more than sixty days, the organization of unit owners is to send notice to both the delinquent unit owner and to any first mortgagee. G.L. c. 183A, § 6(c), first par. In particular, prior to filing any court action to enforce the lien, the organization of unit owners is to give the first mortgagee thirty days' notice. Id. "[P]ayment of the assessments with respect to such six month period, and to the extent of any costs or reasonable attorneys' fees incurred in said action, shall serve to discharge such lien to the extent that such lien is prior" to a first mortgage on the unit. G.L. c. 183A, § 6(c), second par. Thus, the plain language of the statute indicates that, once the lien priority amount is paid, including attorneys' fees and costs, the lien priority is extinguished. See Galenski v. Town of Erving, 471 Mass. 305 , 309 (2015) (statutory interpretation begins with plain language of statute).

Brookside nevertheless contends that, despite payment of the lien priority amount and attorney's fees and costs, HSBC could not maintain its lien priority unless it also agreed to pay all future common expenses, pursuant to G.L. c. 183A, § 6(c), fourth par. That provision allows a first mortgagee to enter into a voluntary agreement with the organization of unit owners in order to forestall suit. Once the parties enter into such agreement, the statute provides that the organization of unit owners may pursue action if the first mortgagee does not comply with its obligations under the agreement. The provision does not reference discharge of the lien priority in any manner. Nor does it refer back to the provision, two paragraphs earlier, which does mention discharge of the priority lien. The two provisions are separate and deal with distinct issues.

Indeed, the two provisions were enacted at separate times. Section 6(c), second par., was enacted in 1992. St. 1992, c. 400, § 9. It established the six-month lien priority for the organization of unit owners and, at the same time, the method by which that lien priority could be extinguished. Section 6(c), fourth par., was enacted in 1998. St. 1998, c. 242, § 6. It set forth a procedure by which a first mortgagee could forestall litigation by taking over the financial responsibilities of the unit owner. The later legislation left intact the provision regarding discharge of the priority lien. Payment of the lien priority amount with attorney's fees and costs remained the only thing required to

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discharge the priority lien; there is no indication that the later legislation was meant to require additional steps. Certainly, this could have been done explicitly by modifying the language regarding discharge of the priority lien. See Commonwealth v. George W. Prescott Publ. Co., LLC, 463 Mass. 258 , 266 (2012) (had Legislature intended particular result, it had ample opportunity to state so explicitly). We reject Brookside's argument that HSBC was required to agree to pay all future common expenses in order to discharge the priority lien.

Brookside alternatively argues that, despite HSBC's payment of the lien priority amount and accrued attorney's fees and costs, the lien priority is not extinguished until payment of all costs and fees incurred in the action. Yet, as a practical matter, there is nothing left to the lien enforcement action after the six-month priority amount has been paid. [Note 5] The condominium lien is established by statute and exists without any need for the organization of unit owners to take any further action. See G.L. c. 183A, § 6(c), second par. ("Recording of the master deed constitutes record notice and perfection of this lien; no further recordation of any claim or lien for assessment under this section is required."). The purpose of the lien enforcement action is to obtain authorization to sell the property in order to recover its six months of delinquent common expenses. See id. ("A lien under this section shall be enforced in the manner provided in" G.L. c. 254, §§ 5 and 5A, dealing with lien enforcement and court ordered sale of real estate). Where the organization of unit owners has been paid this amount, and has been compensated for its costs and fees incurred to obtain satisfaction, there is nothing further to be gained by pursuing a lien enforcement action; there simply should be no further accrual of costs and fees. [Note 6]

To be sure, Brookside is entitled to pursue Baras for the nonpriority amount of the lien. See G.L. c. 183A, § 6(c), third par. ("Neither this section nor anything contained in" G.L. c. 254, §§ 5 or 5A "shall be deemed to prohibit actions to recover sums for which this subsection creates a lien or to prohibit an organization of unit owners from taking a deed in lieu of enforcement of the lien created by this section."). These collection efforts, however, would not be in pursuit of a lien enforcement action. The costs and fees associated with these collection efforts may be charged to Baras. See G.L. c. 183A, § 6(b) ("The unit owner shall be personally liable for all sums assessed for his share of the common expenses including late charges, fines, penalties, and interest assessed by the organization of unit owners and all costs of collection including attorneys' fees, costs and charges."). But they do not become part of the lien priority. See Residences at Cape Ann Heights Condominium Ass'n v. Halupowski, 83 Mass. App. Ct. 332 , 333 (2013) (distinguishing between two avenues condominium association has to

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collect common expenses, in personam action against unit owner versus in rem action against unit itself -- which constitutes lien enforcement action).

Indeed, after Brookside obtained full satisfaction of its lien priority amount and costs and fees incurred to that point, the only way in which it could justify the continued maintenance of a lien enforcement action was to amend its complaint to assert its theory that ongoing costs and fees associated with collection of nonpriority amounts become part of the lien priority. We reject this circular theory, which contradicts the plain language of the statute, providing that only those costs and fees as are "incurred in the action to enforce the lien," G.L. c. 183A, § 6(c), second par., take priority. See Townehouse of Amherst Condominium Ass'n v. U.S. Bank Nat'l Ass'n, No. 11-P-2025 (Mass. App. Ct. Aug. 24, 2012) (unpublished Rule 1:28 decision) (condominium lien enforced strictly against one seeking lien). After HSBC paid Brookside the agreed upon amount so as to satisfy the six-month lien priority and all attorney's fees and costs incurred in the lien enforcement action to that point, the lien priority was extinguished. Brookside could not resurrect the priority by continuing to accrue legal fees in a moot lien enforcement action.

The judgment is vacated.


FOOTNOTES

[Note 1] As Trustee of Brookside Condominium Trust.

[Note 2] Arthur Bloom, Arlene Gillis, Lisa Pollock, and Kristin Kelley, as Trustees of Brookside Condominium Trust.

[Note 3] HSBC Bank USA, N.A.

[Note 4] Although the court's "Order and Judgment" is dated September 5, 2014, it was not entered into the docket until March 31, 2015, as a "Revised Order and Judgment."

[Note 5] Theoretically, an organization of unit owners could continue to pursue a lien enforcement action with no lien priority. Because its lien would be subject to the first mortgage, however, the organization of unit owners would often receive no recovery. For this reason, a lien enforcement action is typically not pursued unless there is a lien priority. Indeed, in this case, the organization of unit owners only pursued the lien enforcement action after amending its complaint to allege a lien priority.

[Note 6] Pursuant to Drummer Boy Homes Ass'n v. Britton, Supreme Judicial Court, No. SJC-11969 (March 29, 2016), the condominium association may file another action to recover an additional six months of delinquent common expenses.