Home GEORGIA DRIZ, LLC v. ROBERT J. SPENLINHAUER [Note 1]

2017 Mass. App. Div. 120

April 14, 2017 - August 15, 2017

Appellate Division Southern District

Court Below: District Court, Barnstable

Present: Finnerty, Kirkman & Finigan, JJ.

Anthony Alva for the plaintiff.

Seth G. Roman for the defendants.


KIRKMAN, J. In this postforeclosure summary process action, the defendants claim a lack of proper notice of the foreclosure sale. Specifically, the issue is whether the foreclosing bank was required to republish notice of the sale after it had been postponed by public proclamation. The matter was decided in a summary judgment against the defendants in the Barnstable District Court. This appeal resulted. The following facts are not in dispute.

Robert J. Spenlinhauer ("Spenlinhauer") owned residential property at 828 Seaview Avenue, Osterville, Massachusetts, in the name of C.C. Canal Realty Trust, as the trustee and beneficiary. Eric Josephson ("Josephson") occupies an accessory apartment on the property. The Cooperative Bank of Cape Cod held a mortgage and note on the property pursuant to a revolving credit agreement and the note signed by Spenlinhauer as trustee in 2006 (the bank was then known as the Cape Cod Cooperative Bank). The trust and debtor (Spenlinhauer) defaulted on the note, and Spenlinhauer sought relief by filing for Chapter 11 bankruptcy protection in December, 2013. See In re Spenlinhauer, U.S. Bankr. Ct., No. 13-17191-JNF (Bankr. D. Mass. 2013). In July, 2014, the bank sought, and was granted, relief from the automatic stay provisions of the Bankruptcy Code, 11 U.S.C. § 362(d), in order to proceed with a foreclosure on the property.

The appropriate notices were sent and published, pursuant to G.L. c. 244, § 14, for a sale to occur at the property on November 19, 2015. Nevertheless, on November 6, 2015, the Bankruptcy Court issued an order reinstating the stay for ninety days and ordering a postponement of the sale until after that period had run because of a change in Spenlinhauer's financial circumstances that protected the bank's interest during the postponement. See C.C. Canal Realty Trust v. Harrington, (In re Spenlinhauer), U.S. Dist. Ct., No. 13-17191 (D. Mass. March 23, 2017) (for fuller information about proceedings in Bankruptcy Court). On November 19, 2015, the sale was postponed by "public proclamation" (verbal notice to those present) to April 6, 2016. There were no new written or published notices of the new sale date. On April 6, 2016, the bank successfully bid on the property. On April 11, 2016, the bank sold its interest to the plaintiff.

Page 121

On April 23, 2016, Spenlinhauer was served with a notice to vacate the premises. The notice included any occupants residing pursuant to a tenancy agreement and gave a vacate date of the "expiration of that month of your tenancy which shall begin next after this date." On April 30, 2016, Josephson was served with a similar notice. On May 16, 2016, Josephson was served with another notice to vacate no later than midnight, May 31, 2016. On June 1, 2016, Josephson was served with a seventy-two hour notice to quit. A summary process action was commenced on June 13, 2016.

Because Spenlinhauer was seeking bankruptcy protection, he and Josephson insist that postponement by public proclamation was insufficient notice of the foreclosure sale and further written and publication notice was required by law. Moreover, Josephson claims he should have been considered as a tenant at will and provided the requisite notice to quit for one occupying that status pursuant to G.L. c. 186, §§ 12 and 13A. Therefore, the defendants assert the trial judge incorrectly found against them on summary judgment. There was no error by the trial court granting summary judgment.

A court will grant summary judgment where there are no genuine issues of material fact and where the record, including the pleadings and affidavits, entitles the moving party to judgment as a matter of law. Cassesso v. Commissioner of Correction, 390 Mass. 419 , 422 (1983). The moving party bears the burden of affirmatively demonstrating the absence of a triable issue, and showing that summary judgment entitles it to judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14 , 16-17 (1989). If the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts that would establish the existence of a genuine issue of material fact in order to defeat a motion for summary judgment. Id. at 17. A party opposing summary judgment "cannot rest on his or her pleadings and mere assertions of disputed facts to defeat the motion for summary judgment." LaLonde v. Eissner, 405 Mass. 207 , 209 (1989).

Summary judgment motions may be accompanied by affidavits based on personal knowledge that set forth such facts as are admissible in evidence. Mass. R. Civ. P. 56(e). The court, for purposes of summary judgment, will review such facts and all reasonable inferences from those facts in the light most favorable to the nonmoving party. Ford Motor Co., Inc. v. Barrett, 403 Mass. 240 , 242 (1988).

There is virtually no dispute as to what happened leading to this litigation. While the defendants claim there are triable facts, they offered no counter affidavits showing the same or even articulated any contrary facts that require resolution by a fact finder. While Josephson argues he is a tenant at will, in his opposition to the plaintiff's motion for summary judgment, he admits he paid no rent for his occupancy and points to no other consideration supporting a tenancy at will. He offers nothing, other than a bald assertion, that an agreement was reached with Spenlinhauer creating a tenancy at will. See Maguire v. Haddad, 325 Mass. 590 , 593 (1950); Williams v. Seder, 306 Mass. 134 , 136 (1940) ("A tenancy at will arises out of an agreement, express or implied, by which one uses and occupies the premises of another for a consideration . . . ."). Josephson is, at most, a tenant at sufferance. More to the point, the arguments the defendants raise rely solely on interpretations of the law as it has developed over time.

"If the statutory norms found in G.L. c. 244, §§ 11-17B, governing foreclosure of real estate mortgages, have been adhered to, Massachusetts cases have generally regarded that as satisfying the fiduciary duty of a mortgagee to deal fairly with the mortgaged property, unless the mortgagee's conduct manifested fraud, bad faith, or the absence of reasonable diligence in the foreclosure sale process." Pemstein v. Stimpson,

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36 Mass. App. Ct. 283 , 286 (1994). See also Edry v. Rhode Island Hosp. Trust Nat'l Bank (In re Edry), 201 B.R. 604, 606-607 (Bankr. D. Mass. 1996).

The defendants have not made any claim that the plaintiffs' dealing with them or the sale have demonstrated any fraud, bad faith, or the absence of reasonable diligence in the foreclosure sale process other than the lack of a written and published notice upon postponement. The cases relied upon by the defendants out of the Federal and State courts all involved some manifest fraud or lack of due diligence, triggering better notice of forfeiture and thus preserving the due process interest at stake regarding a foreclosure.

The defendants rely on a Federal bankruptcy case, In re Ruebeck, 55 B.R. 163 (Bankr. D. Mass. 1985), for establishing a hard and fast rule under Massachusetts law, that any postponement of a foreclosure sale of property belonging to a party in a bankruptcy proceeding must include new advertisements and written notice. The defendants read the decision too broadly, however.

The Ruebeck rule was created in the context of a fraudulent conveyance, as prohibited by 11 U.S.C. 548(a)(2)(A) and (B)(i), because the price obtained at the sale of the property at issue fell below the fair market value. No such claim exists here. And for the reasons stated in the plaintiffs-appellees' briefs (pages 8-17 in opposition to Spenlinhauer, and pages 10-19 in opposition to Josephson), we decline to read the rule into Massachusetts law in this case. See G.L. c. 109A, § 4; Resolution Trust Corp. v. Carr, 13 F.3d. 425, 431 (1st Cir. 1993); Fitzgerald v. First Nat'l Bank of Boston, 46 Mass. App. Ct. 98 , 101 (1999) ("[Q]uestions regarding notice of foreclosure proceedings will continue to be viewed according to the criteria set forth in our cases, rather than under any hard and fast rule, in light of the mortgagee's general obligations of good faith, diligence, and fairness in the disposition of the mortgaged property."). Similarly, we are unwilling to create new notice requirements for one occupying premises under Josephson's circumstances.

After a foreclosure, the mortgagor becomes a tenant at sufferance of the mortgagee. Cunningham v. Davis, 175 Mass. 213 , 222 (1900); Singh v. 207-211 Main St., LLC, 78 Mass. App. Ct. 901 , 902 (2010). See Deutsche Bank Nat'l Trust Co. v. Gabriel, 81 Mass. App. Ct. 564 , 571 (2012). As described above, Josephson is, at most, a tenant at sufferance.

At common law, a tenant at sufferance is entitled to no notice of the termination of that status before a landlord moves against him to obtain possession. Kinsley v. Ames, 2 Met. 29 , 31 (1840). See Hooton v. Holt, 139 Mass. 54 , 55 (1885); Kelly v. Waite, 12 Met. 300 , 302 (1847) ("By a former statute, (St. 1825, c. 89, § 4,) it was provided that tenants at sufferance, as well as tenants at will, should have notice to quit. But this was altered by Rev. Sts. c. 60, § 26, limiting the right of notice to tenants at will only . . . ."). Cf. Rubin v. Prescott, 362 Mass. 281 , 284 (1972) (tenant at sufferance, a wrongful possessor, not entitled to any notice of termination before landlord's action for possession). No greater right exists here where the party seeking possession is a postforeclosure purchaser of the property.

Nevertheless, Josephson was entitled to some form of notice of the intent to secure possession of the premises prior to the commencement of a summary process action to allow him enough time to vacate. Hooton, supra at 55. [Note 2] Such notice was adequately given here.

Judgments affirmed.


FOOTNOTES

[Note 1] Individually and as Trustee of C.C. Canal Realty Trust.

[Note 2] In a foreclosure by sale, as alleged here, the notice of the sale as required by G.L. c. 244, §§ 14 and 15 is enough notice of an intent to secure possession of the premises.