HARVARD 45 ASSOCIATES LLC vs. ALLIED PROPERTIES AND MORTGAGES, INC., ANDRE DANESH, and MARY BISHAY

Plaintiff filed its unverified Complaint on September 19, 2008, pursuant to G. L. c. 240, § 6, to quiet title to property located at 163 Blue Hill Drive, Westwood, Massachusetts (“Locus”), relative to a second mortgage (the “Mortgage”) on Locus dated May 31, 2001. [Note 1] Defendant Mary Bishay (“Bishay”), assignee of the Mortgage from Defendants Allied Properties and Mortgages, Inc. (“Allied”) and Andre Danesh (the President and Treasurer of Allied) (“Danesh”), filed her Answer, Counterclaim, and Jury Demand on October 27, 2008, requesting a declaratory judgment pursuant to G. L. c. 231A, § 1, that the Mortgage is binding. [Note 2] Plaintiff filed its Reply to Counterclaim on November 13, 2008. A case management conference was held on December 11, 2008. On December 31, 2008, Bishay filed a Motion to Compel Plaintiff to Post Security, together with Affidavit of Bahig F. Bishay. Plaintiff filed its Motion for Preliminary Injunction on February 9, 2009, together with Affidavit of Mary McCarthy. On February 10, 2009, this court held a hearing on the motion to post security, and denied such motion on February 17, 2009. [Note 3]

Plaintiff filed its Motion for Partial Summary Judgment and Request for Speedy Hearing on November 5, 2008, together with supporting brief, Concise Statement of Material Facts, and Appendix. On December 10, 2008, Bishay filed her Motion for Summary Judgment, together with supporting brief, Concise Statement of Material Facts, and Appendix. Bishay filed Affidavits of Bahig F. Bishay on December 11, 2008, and December 31, 2008. Plaintiff filed its Opposition to Bishay’s summary judgment motion, together with Affidavits of Nicholas J. Nesgos and Harold Brown, on January 9, 2009. A summary judgment hearing was held on June 22, 2009, and at that time all motions were taken under advisement. [Note 4]

Summary judgment is appropriate where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. See Cassesso v. Comm’r of Corr., 390 Mass. 419 , 422 (1983); Cmty. Nat'l Bank v. Dawes, 369 Mass. 550 , 553 (1976); Mass. R. Civ. P. 56(c).

This court finds that the following facts are not in dispute:

1. Bahig Bishay (“Bahig”) purchased Locus in 1978 by deed recorded with the Norfolk County Registry of Deeds (the “Registry”) at Book 5508, Page 14.

2. In January 2001, Brighton Avenue Associates LLC (“BAA”) purchased property located at 1095 Commonwealth Avenue in Boston (the “Boston Property”) from Bahig and leased it back to Bahig. [Note 5]

3. On May 24, 2001, BAA and Bahig executed an Agreement for Judgment with respect to Brighton Avenue Assocs. v. Bahig Bishay d/b/a U.S. Auto Exchange Group, Ltd., Brighton District Court, Civil Action No. 0108 CV 0125. On May 30, 2001, the Brighton District Court issued a Judgment by Agreement (the “Judgment by Agreement”) in favor of BAA, whereby BAA was awarded a money judgment in the amount of $120,874.10, plus interest, costs, and attorney’s fees, in addition to possession of the Boston Property. [Note 6]

4. In favor of BAA and consistent with the Judgment by Agreement, the Brighton District Court issued a Writ of Execution on Money Judgment and for Possession Involving Premises Not Leased or Rented as a Dwelling (the “Execution”), dated May 30, 2001. The Execution was valid for twenty years.

5. On May 31, 2001, Bahig granted Allied the Mortgage with respect to Locus (not the Boston Property) to secure a note (the “Note”) of the same date in the amount of $300,000. The Note’s maturity date was August 31, 2001. The Mortgage was recorded with the Registry at Book 15097, Page 490. [Note 7]

6. On August 15, 2001, pursuant to the Execution, a Norfolk County Deputy Sheriff seized all of Bahig’s right, title, and interest in Locus. [Note 8]

7. By Agreement (the “Extension Agreement”) dated August 31, 2001, Allied and Bahig agreed to extend the maturity date of the Mortgage to August 31, 2003. [Note 9] The Extension Agreement was never recorded with the Registry.

8. By Assignment dated February 17, 2004, BAA assigned Plaintiff its right, title, and interest in the Execution “to the extent necessary to enable [Plaintiff] to bid as the creditor up to the full amount on the Execution, at its discretion, for the purchase of [Locus].”

9. By Sheriff’s deed dated February 18, 2004, Plaintiff purchased Bahig’s interest in Locus for $70,000. The Sheriff’s deed was recorded with the Registry at Book 20758, Page 262.

10. On February 9, 2005, Bahig filed an action in Norfolk Superior Court to exercise his right of redemption to Locus relative to the Execution and Sheriff’s deed. See Bishay v. Brighton Ave. Assocs., LLC, Norfolk Superior Court, Civil Action No. 05-00244.

11. Bahig’s right of redemption in Locus was terminated by Judgment (the “Right of Redemption Judgment”) of the Norfolk Superior Court dated October 13, 2006. The Right of Redemption Judgment provided that

[Bahig Bishay], having failed to deposit the amount necessary to redeem the property known as 163 Blue Hill Drive, Westwood, MA (“Property”) in accordance with the Decision [entered on June 13, 2006], has waived and failed to exercise his redemption rights pursuant to G. L. c. 236. Therefore Harvard 45 Associates, LLC holds fee simple title to the Property . . . free of all Bahig Bishay’s rights of redemption.

Bahig appealed the Right of Redemption Judgment, but such Judgment was affirmed by the Massachusetts Appeals Court on January 8, 2008.

12. By Assignment of Mortgage dated November 30, 2006 (the “Danesh Assignment”), Allied assigned the Note and Mortgage to Danesh. The Assignment was recorded with the Registry on December 7, 2006, at Book 24340, Page 31.

13. On March 17, 2008, Plaintiff brought a summary process action in the Dedham District Court against Bahig and Bishay for possession of Locus. Judgment (the “Summary Process Judgment”) was entered for Plaintiff on April 17, 2008. Bahig and Bishay’s appeal of the Summary Process Judgment was dismissed on August 25, 2008.

14. On April 7, 2008, Allied filed a Complaint to Foreclose the Mortgage under the Servicemembers Civil Relief Act in the Land Court (08 MISC 378069) (the “Servicemembers Case”). A Judgment for Entry and Sale was entered on September 23, 2008. [Note 10]

15. Plaintiff filed this case in the Land Court on September 19, 2008.

16. On September 29, 2008, Danesh executed an Affidavit (the “Danesh Affidavit”) concerning the Mortgage. [Note 11] The Danesh Affidavit referenced the Extension Agreement.

17. By instrument dated October 2, 2008, Danesh assigned the Mortgage to Bishay. [Note 12]

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The central issue in the case at bar is the validity of the Mortgage. [Note 13] Plaintiff argues that the Mortgage has expired and is discharged pursuant to G. L. c. 260, § 33, as amended. Bishay contends that such statute is ambiguous and, thus, this court must look at the underlying legislative intent, which Bishay contends supports a conclusion that the Mortgage is still in effect. Bishay also looks to the principles of judicial estoppel and equity in support of her position. This court shall address each of these issues in turn.

G. L. c. 260, § 33, as amended by Section 6 of Chapter 63 of the Acts of 2006, which became effective on October 1, 2006 (the “Amendment”), states as follows:

A power of sale in any mortgage of real estate shall not be exercised and an entry shall not be made nor possession taken nor proceeding begun for foreclosure of any such mortgage after the expiration of, . . . in the case of a mortgage in which the term or maturity date of the mortgage is stated, 5 years from the expiration of the term or from the maturity date, unless an extension of the mortgage, or an acknowledgment or affidavit that the mortgage is not satisfied, is recorded before the expiration of such period. . . . The period shall not be extended by reason of . . . partial payment, agreement, extension, acknowledgment, affidavit or other action not meeting the requirements of this section and sections 34 and 35. Upon the expiration of the period provided herein, the mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption or any other persons having an interest in the mortgaged property . . . . [Note 14]

Sections 8 and 9 of Chapter 63 of the Acts of 2006 provide that, with respect to mortgages existing prior to the effective date of the Amendment,

[the Amendment] shall apply to all mortgages, whether recorded before, on or after the effective date hereof, except that, the term of a mortgage which as a result of sections 5 and 6 [G. L. c. 260, § 33] would expire within 1 year after the effective date of this act shall be extended for a period of 1 year from the effective date of this act.

G. L. c. 260, § 34 (“Section 34”) states as follows:

No extension of the mortgage, and no acknowledgment that the mortgage is not satisfied . . . shall be sufficient to extend the period specified in section thirty-three unless it is executed by one or more of the person or persons then appearing of record to own the real estate then subject to the mortgage, and describes the mortgage sufficiently to identify the record of it, and states that the property is subject to the mortgage or that the mortgage is not satisfied. No affidavit that the mortgage is not satisfied shall be sufficient to extend the period unless it is executed by the holder of the mortgage, describes the mortgage sufficiently to identify the record thereof, names one or more of the person or persons then appearing of record to own the real estate then subject to the mortgage, and states that the mortgage remains unsatisfied, and if the mortgage secures a promissory note or sum of money, the amount believed to remain unpaid. . . .

Plaintiff first refers to the Mortgage’s maturity date of August 31, 2001, and asserts that, pursuant to the Amendment, the Mortgage was discharged on either August 31, 2006 (five years after its stated expiration) or October 1, 2007 (one year after the effective date of the Amendment). [Note 15] Plaintiff also contends that the Extension Agreement, which sought to extend the maturity date of the Mortgage to August 31, 2003, was not effective because it was not recorded. Under the plain language of the Amendment, to be valid, an extension to a mortgage must be recorded prior to the mortgage’s expiration date. See G. L. c. 260, § 33. As the Extension Agreement was never recorded, this court agrees with Plaintiff that such agreement failed to extend the maturity date of the Mortgage. [Note 16]

Bishay argues that the Mortgage was extended pursuant to the Amendment and to Section 34, as both the Danesh Assignment and the Danesh Affidavit extended the Mortgage. However, the Danesh Assignment does not meet the requirements of Section 34 because it was neither executed by the owner of Locus at the time of execution (Plaintiff), nor does it state that Locus is subject to the Mortgage or that the Mortgage is not satisfied. Moreover, the Danesh Assignment is dated November 30, 2006, which is later than August 31, 2006 (the date that the Mortgage was discharged under the Amendment) and also subsequent to October 1, 2006 (the effective date of the Amendment). [Note 17] Similarly, the Danesh Affidavit, although it appears to meet the content requirements of Section 34, was dated September 29, 2008, far after August 31, 2006 (the date that the Mortgage was discharged), October 1, 2006 (the effective date of the Amendment), or October 1, 2007 (the date agreed by the parties as to the date of discharge of the Mortgage). Moreover, the summary judgment record does not indicate that the Danesh Affidavit was ever recorded. [Note 18]

Bishay also asserts that the Amendment is ambiguous and, thus, this court must be guided by the legislative intent of G L. c. 260, § 33. Bishay states that such legislative intent is “to clear titles of old and obsolete mortgages, without the need of obtaining a discharge.” Town of Pembroke v. Gummerus, 16 LCR 487 , 490 (2008) (Misc. Case No. 311622) (Piper, J.). Bishay then claims that the Mortgage was not obsolete, and therefore remains in effect, for numerous reasons, including that: (1) Plaintiff acknowledged the existence of the Mortgage in various correspondence through its attorney; (2) the current holder has attempted to foreclose on the Mortage; [Note 19] and (3) until the Amendment, the Mortgage could have been foreclosed upon for another forty plus years.

However, this court does not conclude that the Amendment is ambiguous. [Note 20] Rather, the clear intent of the Amendment was to address the status of mortgages similar to the one in this case, as the Amendment specifically states that

[t]he period shall not be extended by reason of . . . agreement, extension, acknowledgment, affidavit or other action not meeting the requirements of this section and sections 34 and 35. Upon expiration of the period provided herein, the mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption . . . .

Moreover,

[w]here the language of a statute is clear and unambiguous, it is conclusive as to legislative intent, and the courts enforce the statute according to its [plain] wording, which we are constrained to follow . . . [so long as] its application would not lead to an absurd result. . . . We need not look beyond the words of the statute itself, in such a case, even if we . . . recognize a potential unfairness within a statute’s clear language . . . .

Martha’s Vineyard Land Bank Comm’n v. Assessors of West Tisbury, 62 Mass. App. Ct. 25 , 27-28 (2004) (internal quotations and citations omitted).

Bishay further maintains that Plaintiff does not have good title to Locus under G. L. c. 223, § 75, which relates to attaching property. This court is unconvinced that such statute is relevant to the facts of the case at bar. Moreover, Bishay overlooks the Right of Redemption Judgment, that was upheld on appeal, which found that Plaintiff “holds fee simple title to [Locus] . . . free of all [Bahig’s] rights of redemption.”

Bishay also claims that Plaintiff should be judicially estopped from denying the validity of the Mortgage because of inconsistent statements that Plaintiff made in discovery requests in a prior action (the summary process action that Plaintiff brought against Bishay and Bahig). “Judicial estoppel is an equitable doctrine that precludes a party from asserting a position in one legal proceeding that is contrary to a position it had previously asserted in another proceeding.” Blanchette v. School Comm. of Westwood, 427 Mass. 176 , 184 (1998). A review of the summary judgment record does not disclose any inconsistent statements. As such, the doctrine of judicial estoppel does not apply here. See id. at 185.

Finally, Bishay contends that equity favors the validity of the Mortgage as the Amendment decreased the enforceability time frame of a mortgage and because of correspondence from Plaintiff’s attorney purportedly acknowledging the validity of the Mortgage. The “grant of equitable powers does not permit a court to disregard statutory requirements.” T F. v. B. L., 442 Mass. 522 , 533 (2004) (citing Freeman v. Chaplic, 388 Mass. 398 , 406 n.15 (1983)). Moreover, “[e]quity is not an all_purpose judicial tool by which the ‘right thing to do’ can be fashioned into a legal obligation possessing the legitimacy of legislative enactment.” Id. at 533-34. Both of Bishay’s arguments have been dealt with, supra, and need not be rehashed in context of this court’s equitable powers. Furthermore, Bishay had knowledge of all facts relevant to this case when she took the assignment of the Mortgage in October of 2008.

As a result of the foregoing, I find that, pursuant to the Amendment and Section 34, the Mortgage has expired and is no longer valid. I ALLOW Plaintiff’s Motion for Partial Summary Judgment and DENY Bishay’s Cross-Motion for Summary Judgment.

Judgment to enter accordingly.

Alexander H. Sands, III

Justice

Dated: February 16, 2010