A.R.A. REALTY TRUST CORPORATION v. LEO C. MONTY and PHYLLIS L. MONTEIRO

This matter was before the court on February 7, 2020 with respect to a prejudgment Motion for Payment of Use and Occupancy (the "Motion") filed by the plaintiff, A.R.A. Realty Trust Corporation ("Plaintiff" or "Landlord"). In its Motion, Plaintiff requests that defendants Leo C. Monty ("Monty") and Phyllis L. Monteiro ("Monteiro") (collectively, the "Defendants"), be ordered to pay monthly use and occupancy into escrow until final judgment is entered in this case. Defendant Monteiro timely filed a jury demand, which will delay the final resolution of this matter until at least May 2020. [Note 1] A use and occupancy hearing was held and argued by counsel, who appeared for Plaintiff and Monteiro. [Note 2]

Whether an order for interim use and occupancy payments during the pendency of a summary process action is appropriate and the amount of any such payments is left to the discretion of the trial judge to determine on a case-by-case basis after balancing the equities. Davis v. Comerford, 483 Mass. 164 , 179 (2019). Use and occupancy payments may not exceed the fair value of the rental premises, and certain defenses and counterclaims asserted by a defendant may offset or eliminate a defendant's liability for ongoing use and occupancy payments. Id. at 181. When considering a prejudgment order for use and occupancy payments, the Court must consider the following factors, to the extent relevant to the particular case:

1. The time delay expected before final resolution;

2. The amount of rent alleged to be due;

3. The number of months the plaintiff has not received even a partial rental payment;

4. The amount of the plaintiff's monthly obligations for the premises;

5. Whether the plaintiff faces a substantial threat of foreclosure or other pressing financial obligations;

6. A defendant's likelihood of success on claims or defenses that may justify rent withholding or rent abatement;

7. Whether the defendant had to pay out of pocket for repairs or maintenance to address habitability issues at the premises;

8. The requirements set out in G.L. c. 239, §8A, such as the landlord's knowledge of the conditions prior to the withholding of rent and whether the tenant caused the complained of conditions;

9. Whether the housing code or other violations alleged are minor or substantial;

10. Whether documentation such as inspection reports or photographs support a preliminary determination regarding such conditions; and

11. The financial positions of the parties, including whether the defendant has been allowed to proceed in forma pauperis.

Davis v. Comerford, 483 Mass. at 180-182.

In this case, Plaintiff purchased the subject property located at 585 Elm Street in New Bedford, Massachusetts (the "Property") following a foreclosure sale on August 29, 2019; defendant Monteiro is the former owner. [Note 3] The Court finds that following the foreclosure the Defendants became tenants at sufferance. See Carney v. Conveyancers Title Ins. & Mtg. Co., 309 Mass. 197 , 200 (1941). While the Supreme Judicial Court ("SJC") in Davis v. Comerford framed its ruling using the terms "landlord" and "tenant", the SJC did not make an exception for post-foreclosure summary process actions, instead concluding that "even in situations not covered by [G.L. c. 239,] §8A and G.L. c. 111, § 127F, a court's equitable powers support its discretionary authority to order interim use and occupancy payments." Davis, 483 Mass. at 177. The SJC also expressly recognized that tenants at sufferance, such as the Defendants here, are responsible for payment of the fair rental value of the premises during the period they occupy or detain same. Id. at 180. Accordingly, the Court applies the relevant factors set forth in Davis v. Comerford to the instant case and balances the equities.

Here, it is undisputed that the Property consists of a three (3) bedroom, 1 ½ bath single family home in New Bedford. Plaintiff acquired the Property at foreclosure on August 29, 2019 for $105,250.00. Plaintiff's carrying costs are as follows: $1,129.06/month mortgage, $2,419.15/year taxes, $1,800.00/year insurance, $237.07/year water. The Court finds Plaintiff's carrying costs average approximately $1,500.00 per month. Plaintiff has received no payments from Defendants since it acquired the Property in August 2019.

Monteiro is elderly and disabled, and she continues to pay the gas, electric and oil bills for the Property. She argues that Plaintiff knew or should have known that it would have to carry the Property for an extended period of time without the expectation of receiving payment because it purchased a foreclosed property with the former owner in possession. Monteiro further argues that Plaintiff's mortgage expense is high given the purchase price, and also that since Plaintiff is subject to a restraining order issued by the United States District Court ("District Court"), which order precludes Plaintiff from selling or leasing the Property without permission of the District Court, that Plaintiff would have to pay the carrying costs whether or not the Property was occupied. Monteiro's arguments are generally unavailing.

Here, Plaintiff established its monthly carrying costs. Even if Plaintiff's mortgage expense is at an unusually high interest rate, there is no question that the fair rental value of a single family home in New Bedford is at least $1,200.00 per month. While Plaintiff may not be permitted to sell or lease the Property without permission of the District Court, Plaintiff is precluded from renovating it while Monteiro remains in possession. Monteiro argues that she has counterclaims for breach of quiet enjoyment, that she needs discovery, that she is elderly and disabled, and that her monthly income is only $1,008.00. Monteiro offered to pay $450.00 per month in use and occupancy pending adjudication of this matter.

After balancing the above factors applicable to the instant case, the Court finds in the absence of an interim order requiring that Monteiro pay use and occupancy, Plaintiff will be required to continue bearing the carrying costs of the Property for a prolonged period of litigation, and the likelihood of Plaintiff recovering the fair rental value of the Property after trial is unlikely given Monteiro's limited financial resources. In addition, Tenant has no G.L. c. 239, §8A claims or defenses that could result in a defense to possession. Even if Monteiro were to prevail on her counterclaims for breach of quiet enjoyment, Plaintiff is entitled to the fair rental value of the Property from August 2019. Given the extended period during which Plaintiff has received no payment from Monteiro, Plaintiff is likely to recover damages well in excess of Monteiro's counterclaims. While Monteiro is elderly, disabled and of limited means, that does not excuse her from the obligation to pay use and occupancy pending her jury trial, nor should the burden of those expenses be shifted to Plaintiff simply because it bought the Property following a foreclosure. For these reasons, the Plaintiff's Motion is ALLOWED.

It is ORDERED that Monteiro pay use and occupancy at the rate of $900.00 per month, which the Court finds to be fair and reasonable after consideration of all of the above factors and balancing the equities. Use and occupancy shall be paid into escrow in order to maintain the status quo pending final adjudication. Use and occupancy for the month of February shall be paid on or before February 28, 2020 at 3:00 p.m. Use and occupancy for the month of March shall be paid on or before March 15, 2020, and continuing on the fifteenth (15th) day of each month thereafter until final judgment is entered. If the fifteenth (15th) day of the month falls on Saturday, Sunday or holiday, payment shall be due on the next business day.

It is further ORDERED that each such use and occupancy payment shall be made to Plaintiff's attorney, John A. Walsh, at 156 Eighth Street in New Bedford, Massachusetts 02740 in the form of a certified or bank check or money order made payable to Attorney Walsh as attorney for Plaintiff. Attorney Walsh shall hold all such use and occupancy payments in escrow, shall not release such funds to Plaintiff without leave of this Court, and shall account to the Court upon request. If Monteiro fails to make any one (1) of the required payments for the use and occupancy of the Property as set forth in this Order, then upon motion with written notice to Defendants the Plaintiff may move for sanctions, which sanctions may include the striking of Monteiro's jury demand.

SO ORDERED.