BLACKFOOT CAPITAL, LLC vs. FRANCIS CAMPANIELLO, GRUIABALAN LLC, and WEBSTER FIVE CENTS SAVINGS BANK

Plaintiff Blackfoot Capital, LLC filed its unverified Complaint on December 11, 2006, arguing that a cloud on title of property located at 162 Prescott Street, Worcester, MA (“Locus”) exists because of issues relating to Plaintiff’s compliance with the Servicemembers Civil Relief Act (the “Act”) in connection with a foreclosure sale. [Note 1] Campaniello filed a Motion for Declaratory Judgment to Set Aside Foreclosure on April 12, 2007, based on Plaintiff’s procedural failure to comply with the Act, together with supporting memorandum and Affidavit of Frank Campaniello. Plaintiff filed its Motion for Judgment on the Pleadings on April 20, 2007, seeking to remove a cloud on title of Locus relating to noncompliance with the Act in connection with the foreclosure sale, together with supporting memorandum in support of its motion and in opposition to Campaniello’s motion. Campaniello filed his Opposition to Plaintiff’s motion on May 24, 2007, together with Defendant’s Answer and Counterclaim alleging breach of loan agreement, interference with business opportunity, violation of G. L. c. 93A, § 11, equity of redemption, fraud and misrepresentation, breach of duty of good faith and fair dealing, promissory estoppel and negligence. A hearing was held on Plaintiff’s Motion for Judgment on the Pleadings on June 20, 2007, and the matter was taken under advisement. [Note 2] Mass. R. Civ. P. 12(c) provides that “[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings.” Judgment on the pleadings is appropriate when the text of the pleadings contains no material factual dispute and only issues of law are to be determined. See Tanner v. Bd. of Appeals of Belmont, 27 Mass. App. Ct. 1181 , 1182 (1989) (rescript opinion); Canter v. Planning Bd.of Westborough, 7 Mass. App. Ct. 805 , 808 (1979); and Wing Memorial Hospital v. Dep’t of Public Health, 10 Mass. App. Ct. 593 , 596 (1980). “In deciding a rule 12(c) motion, all facts pleaded by the nonmoving party must be accepted as true,” Id. at 529-30, and “all contravening assertions in the movant’s pleadings are taken to be false,” Ritchie v. Dep’t of State Police, 60 Mass. App. Ct. 655 , 659-60 (2004) (quoting Minaya v. Massachusetts Credit Union Share Ins. Corp., 392 Mass. 904 , 905 (1984)) (quotations omitted). This court finds the following facts are not in dispute:

1. Campaniello owned Locus as of May 3, 2005. On May 3, 2005, Campaniello executed a mortgage on Locus with a statutory power of sale to Plaintiff (the “Mortgage”) which was recorded with the Worcester Registry of Deeds (Worcester District) (the “Registry”) at Book 36271, Page 144.

2. On January 17, 2006, Plaintiff filed a Complaint to foreclose the Mortgage pursuant to the Act (Land Court Misc. Case No. 317962) (the “Act Case”). [Note 3]

3. An Order of Notice was issued by this court on March 14, 2006, and publication was made on April 6, 2006 in the Worcester Telegram & Gazette. Campaniello was served by certified mail on March 18, 2006, as indicated by green receipt card returned to this court. The Order of Notice was recorded with the Registry. [Note 4] The return date specified in the Order of Notice was May 1, 2006.

4. Campaniello did not file any objections to the Act Case with the Land Court by the return date of May 1, 2006.

5. On August 11, 2006, Plaintiff conducted an auction sale of Locus pursuant to the foreclosure, at which sale Gruiabalan made a bid of $250,000 which was accepted by Plaintiff. [Note 5]

6. An Affidavit as to Military Service was filed in the Act Case on October 2, 2006. [Note 6]

7. A deed from Plaintiff to Gruiabalan dated September 27, 2006 was recorded with the Registry on October 8, 2006 at Book 39930, Page 72. On October 8, 2006, a mortgage from Gruiabalan to Webster on Locus securing the sum of $392,000 was recorded with the Registry at Book 39930, Page 77.

8. Plaintiff filed a Motion to Dismiss Complaint in the Act Case on March 16, 2007. A Judgment dismissing the Complaint was entered the same day.

9. The foreclosure auction sale on August 11, 2006, did not comply with the terms of the Act because Judgment in the Act Case had not entered as of that date.

10. Campaniello is not a member of the armed services and is not entitled to the benefit of the Act.

*******************************

The sole issue raised in the Complaint in the case at bar was the removal of the cloud on title on Locus relative to Plaintiff’s noncompliance with the Act in connection with the foreclosure sale. Campaniello’s Counterclaim raised many issues relative to the validity of the foreclosure sale which have nothing to do with the Act and over which the Land Court does not have jurisdiction. Furthermore, no facts have been established in this case relative to any of these Counterclaim claims, including any releases that may have been exchanged between the parties. [Note 7] The Complaint in the Act Case has been dismissed; as a result, this court has not ruled on any issues raised in that Complaint, including the issue of whether the Act has been complied with.

A review of the pleadings in the case at bar indicates that both parties agree that Plaintiff did not comply with the Act, but that Campaniello was not entitled to the benefit of the Act because he was not in the military. As a result, the Act is not applicable to the foreclosure sale. See Beaton v. Land Court, 367 Mass. 385 (1975), where the Supreme Judicial Court states as follows:

“The point to be made here is that actions taken to comply with the 1940 Relief Act, such as the steps prescribed by St. 1943, c. 57, as amended, are not in themselves mortgage foreclosure proceedings in any ordinary sense. Rather, they occur independently of the actual foreclosure itself and of any judicial proceedings determinative of the general validity of the foreclosure. Statute 1943, c. 57, as amended, simply establishes procedures whereby mortgagees, in addition to taking all steps necessary to foreclose, can make certain that there will be no cloud on the title following the foreclosure as a result of an interested party having been in, or just released from, military service and thus under the protective umbrella of the 1940 Relief Act. If a foreclosure were otherwise properly made, failure to comply with the 1940 Relief Act would not render the foreclosure invalid as to anyone not entitled to the protection of that act. In view of the limited purpose of proceedings under the 1940 Relief Act, it is evident why it was appropriate for the Legislature, by St. 1959, c. 105, to limit access to such proceedings to persons entitled to the benefits of the act or to persons appearing on their behalf, and to limit the issues in such proceedings to the existence of such persons and their rights, if any (citations omitted) (emphasis supplied).”

Id. at 390-91.

Beaton makes it clear that Plaintiff’s noncompliance with the Act does not render the foreclosure invalid so long as Campaniello was not entitled to the benefits of the Act. As a result, I find that Plaintiff’s failure to comply with the terms of the Act in conjunction with the foreclosure sale is not a cloud on title to Locus. Plaintiff’s Motion for Judgment on the Pleadings is ALLOWED.

Beaton, however, also makes it clear that Campaniello has the right to otherwise challenge the validity of the foreclosure sale, which Campaniello has done by raising the issues in his Counterclaim. As discussed at a telephone status conference on January 3, 2008, this court does not have jurisdiction over most of the counts of the Counterclaim, and both parties are agreeable to having the Counterclaim removed to Worcester Superior Court. As a result, I shall request an interdepartmental transfer of the Counterclaim to that court.

Campaniello’s Motion for Declaratory Judgment, although briefed and opposed in writing by Plaintiff, was never heard by this court. As discussed at a telephone status conference on January 3, 2008, I shall address the limited issue in that motion relative to Plaintiff’s noncompliance with the Act. Campaniello argued, in his motion, to set aside the foreclosure sale as a result of Plaintiff’s failure to comply with the Act. As discussed, supra, I have found that Plaintiff’s procedural failure to comply with the Act did not result in a cloud on title on Locus. As such, I also find that Plaintiff’s procedural failure to comply with the Act did not render the foreclosure sale void. All other issues raised in Campaneillo’s brief in support of his motion are for another day in another forum. As a result, Campaniello’s Motion for Declaratory Judgment to set aside the foreclosure as it relates to noncompliance with the Act is DENIED.

Judgment to issue accordingly.

Alexander H. Sands, III

Justice

Dated: January 4, 2008