ENDEAVOR CAPITAL NORTH LLC and RICOCHET REAL ESTATE, LLC v. STUART SMITH and 23 LONDONDERRY, LLC

After summary judgment, the sole remaining issue in this case is whether Endeavor Capital North LLC (Endeavor) actually conducted a foreclosure sale of a mortgage on the property at 23 Londonderry Lane, Middleboro, Massachusetts (property) on June 28, 2016, at 1:00 p.m., as advertised. This issue was tried to me, and after taking a view, hearing the testimony of the principal of Endeavor, the auctioneer, defendant Stuart Smith (Smith), and two people who were living at the property at the time, and reviewing the exhibits, I find that the sale did take place as advertised. With no further issues to be decided, judgment shall enter declaring that the foreclosure was valid, 23 Londonderry's equity of redemption was foreclosed, and Endeavor took title to the property free and clear of Smith's second mortgage and any claims of Smith or defendant 23 Londonderry, LLC (23 Londonderry).

Procedural History

The plaintiffs Endeavor and Ricochet Real Estate LLC (Ricochet) filed their complaint in this action on February 20, 2018. On March 19, 2018, defendant Smith filed Defendant, Stuart Smith's Answer to Plaintiff's Complaint. The default of 23 Londonderry pursuant to Mass. R. Civ. P. 55(a) was entered on March 22, 2018. The court held a case management conference on April 2, 2018. At the case management conference, the parties stipulated that defendant Smith's tenancy is not an issue in this case and would not be adjudicated by the court.

On June 25, 2018, Endeavor and Ricochet filed Plaintiffs' Motion for Summary Judgment, Memorandum in Support of Plaintiffs' Motion for Summary Judgment, and Plaintiffs' Statement of Undisputed Material Facts. On July 30, 2018, Smith filed Defendant, Stuart Smith's Opposition to Plaintiffs' Motion for Summary Judgment, Defendant's Response to Plaintiffs' Statement of Undisputed Material Facts in Support of his Opposition to Plaintiffs' Motion for Summary Judgment, and Stuart Smith's Memorandum in Opposition to Plaintiffs' Motion for Summary Judgment. On August 6, 2018, Endeavor and Ricochet filed Plaintiffs' Reply Memorandum to Defendant, Stuart Smith's Opposition to Plaintiffs' Motion for Summary Judgment, Plaintiffs' Motion to Deem Certain of Defendant Stuart Smith's Responses to the Statement of Undisputed Material Facts as Admitted for Failure to Comply with the Provisions of Land Court Rule 4, and Plaintiffs' Reponses to Stuart Smith's Additional Facts. On August 14, 2018, the court heard Plaintiffs' Motion for Summary Judgment. Plaintiffs' Motion to Deem Certain of Defendant Stuart Smith's Responses to the Statement of Undisputed Material Facts as Admitted for Failure to Comply with the Provisions of Land Court Rule 4 was denied without prejudice. Smith filed Defendant, Stuart Smith's Supplemental Memorandum on August 21, 2018 and Endeavor and Ricochet filed Plaintiffs' Reply to Defendant, Stuart Smith's Brief as to Standing to Challenge Foreclosure by Entry on August 28, 2018. The court's Memorandum and Order on Plaintiff's Motion for Summary Judgment issued on November 15, 2018 (Summary Judgment Order).

The pretrial conference was held on January 4, 2019. The plaintiffs' Motion in Limine with Incorporated Memorandum to Preclude the Defendant, Stuart Smith, From Introducing Evidence and/or Arguing at Trial that Endeavor Capital North, LLC did not Conduct a Foreclosure Sale at 23 Londonderry Lane, Middleboro, Massachusetts on June 28, 2013 (Motion in Limine), was filed on February 4, 2019. Stuart Smith's Memorandum in Opposition to Plaintiffs' Motion in Limine was filed on February 27, 2019. The Plaintiffs' Reply to Defendant's Opposition to Plaintiffs' Motion in Limine was filed on March 4, 2019. The court heard the motion on March 13, 2019, and issued its Order Denying Plaintiffs' Motion in Limine on March 19, 2019.

The court took a view on April 29, 2019. Trial was held on April 30, 2019. Exhibits 1-11 were admitted. Testimony was heard from Kurt Stenhouse, Paul Fortey, Sarah Laverty, Kerri Crosby, and Stuart Smith. On June 17, 2019, plaintiffs filed Plaintiffs' Requested Conclusions of Law, Plaintiffs Proposed Findings of Fact, and Plaintiffs' Memorandum in Support of Its Request for Judgment in Their Favor, the defendant filed Defendant, Stuart Smith's Requested Findings of Facts, Rulings of Law, and Trial Brief. Closing arguments were heard on July 12, 2019, and the case was taken under advisement. This Decision follows.

Findings of Fact

Based on the view, [Note 1] the undisputed facts, the exhibits, the testimony at trial, and my assessment of credibility, I make the following findings of fact.

1. By deed recorded on December 11, 2012 with the Plymouth County Registry of Deeds (registry) at Book 42377, Page 167, Smith deeded the property to 23 Londonderry for a recited consideration of $200,000.00. Bernard Laverty, the sister of Sarah Laverty (Laverty) and the uncle of Kerri Crosbie (Crosbie), who were living at the property on the date of the foreclosure sale, was the principal of 23 Londonderry. Exh. 1, ¶ 1; Exh. 2; Tr. 62-63, 72.

2. 23 Londonderry obtained a loan from Endeavor. The loan was secured by a mortgage given by 23 Londonderry to Endeavor in the original principal amount of $160,000.00, recorded on December 11, 2012 with the registry at Book 42377, Page 168, 23 (first mortgage). Exh. 1, ¶ 2; Exh. 3; Tr. 9-10, 22-23.

3. Endeavor is a hard money lender. Kurt Stenhouse is the manager of Endeavor. Tr. 9, 21.

4. By mortgage recorded on January 3, 2013 with the registry at Book 42498, Page 137, 23 Londonderry granted a second mortgage in the original principal amount of $42,640.00 (second mortgage) to Smith. Exh. 1, ¶ 3; Exh. 4; Tr. 85.

5. In or about April of 2013, 23 Londonderry defaulted on the repayment terms of the loan secured by the first mortgage and Endeavor commenced foreclosure proceedings against 23 Londonderry. Exh. 1, ¶ 4; Tr. 10-11.

6. Endeavor mailed notice of the intended foreclosure sale to 23 Londonderry and Smith by certified mail and regular mail. Exh. 1, ¶¶ 5-6.

7. Smith did not receive either of the notices that were mailed to him. Exh. 1, ¶ 7.

8. Endeavor scheduled the foreclosure sale for June 28, 2013 at 1:00 p.m., and advertised the sale. Exh. 1, ¶ 8; Exhs. 6, 10; Tr. 41-42.

9. Endeavor caused to be published in the Middleboro Gazette on June 6, June 13, and June 20, 2013, a Mortgagee's Notice of Foreclosure Sale. Exh. 1, ¶ 9; Exh. 6.

10. On June 28, 2013, the noticed date of the foreclosure sale, the property consisted of a single-family house with an in-law apartment. The house sat roughly in the center of the lot, with its side oriented toward Londonderry Lane where the street formed a circle. The end closest to the street is where the in-law apartment sat above the garage. The driveway sloped down from the house to Londonderry Lane. Tr. 62; View.

11. On that date, Smith lived in the in-law apartment. He had an agreement with Bernard Laverty to live there rent-free in lieu of being repaid on the second mortgage. The main house was occupied by Laverty, her father, her daughter Crosbie, her son-in-law Ciaran Crosbie, and the Crosbies' three children. The Crosbies owned a dog, a chocolate lab mix named Cameron, at that time. Tr. 60-62, 67-69, 79-80, 84-86.

12. At 1:00 p.m. on June 28, 2013, neither Smith nor Laverty were at the property. Laverty generally left for work at 11:00 a.m. and returned at 9:00 p.m. As a stay-at-home mother who also cared for her grandfather who had dementia, Crosbie was at the property, as were her husband and her children. Tr. 63-64, 68-69, 73.

13. I credit the testimony of Stenhouse and Paul Fortey (Fortey) with respect to the events of June 28, 2013, along with a contemporaneous email written by Fortey on June 28 at 4:35 p.m. as part of his normal business practice. Exh. 11; Tr. 43-46, 53. Based on their testimony and the email and other supporting exhibits, I find as follows.

14. On June 28, 2013, Stenhouse arrived at the property in his car shortly before 1:00 p.m. With him was Endeavor's attorney, Rosemary Traini (attorney Traini). Fortey, the auctioneer, arrived at or shortly before the same time in his vehicle. Also arriving at the property were two potential bidders, Dana Chiles (Chiles) and Sean Stuart (Stuart). Tr. 11-13, 33, 47, 49- 50, 52, 55.

15. They parked on the street near the driveway, and made an entry on the property at the foot of the driveway. Tr. 13-14, 34, 49; Exh. 5; view.

16. At that time, Fortey was employed as an auctioneer by Liberty Auction. He had been an auctioneer with Liberty Auction for eight years. Liberty Auction is now defunct. Tr. 38- 39.

17. Fortey has conducted hundreds, if not thousands, of foreclosure auctions. He conducted the auction of the property. He followed his normal practice in conducting this auction. 39-40, 54.

18. Fortey recognized Chiles and Stuart from previous auctions, including auctions that he had conducted for Endeavor. Tr. 49-50, 57.

19. The auction began at 1:00 p.m. and took place on the property at the foot of the driveway. Fortey put out the advertisement, planted his auction flag, read the memorandum of sale, made sure everything was clearly posted, and registered two qualified bidders. Tr. 12, 33- 34, 40, 44, 48-49, 56; Exh. 11.

20. Fortey opened the bidding. Endeavor made the first bid, at $130,000. A second bid was made by either Chiles or Stuart for $131,000. Endeavor then bid $132,000. Tr. 12-13, 37, 50-51; Exh. 11.

21. Endeavor was the successful bidder. Tr. 14.

22. The auction sale lasted approximately ten minutes, and concluded at 1:10 p.m. Tr. 46-47; Exh. 11

23. After the auction was completed, Stenhouse, attorney Traini, and Fortey walked up the driveway toward the house. Tr. 15-16, 34-35.

24. At some point during the auction sale, Cameron, who was in the house, began barking loudly. This was not uncommon; Cameron always barked when people came to the property. Crosbie looked out the window to see why Cameron was barking, and saw at least two cars on the street. Tr. 69-70, 79-80, 87-88.

25. Crosbie asked her husband to check on who was outside. She then decided to go outside to see who was at the property. She checked on her father, gathered up her youngest child who was two at the time, and went outside with her child and her husband. Tr. 70.

26. She met Stenhouse, attorney Traini, and Fortey at the top of the driveway, where it meets the garage and the walkway to the door. Her husband was with her, and she was holding her child. While Fortey testified that he met Crosbie or another resident at the foot of the driveway, I credit Crosbie's and Stenhouse's testimony that they met at the top of the driveway. Tr. 15-16, 34-35, 51-52, 58-59, 70-71, 73; Exh. 11; view.

27. She and Stenhouse had a conversation. Their respective memories of the conversation differ. Stenhouse recalls telling Crosbie that the foreclosure sale had just taken place. Crosbie does not remember any mention of foreclosure, but does recall that she was informed that the first mortgage was in default and that Stenhouse asked if she was paying rent and how much money she had put into the property. Tr. 16, 35, 72.

28. During the conversation, Stenhouse asked Crosbie for her contact information. She wrote her name, telephone number, and the name of her husband on the back of a document that attorney Traini was carrying in her file. He told Crosbie that someone would be in touch, and Stenhouse, attorney Traini, and Fortey left the property. Exh. 9; Tr. 16-20, 82-83.

29. On July 18, 2013, Endeavor recorded a Certificate of Entry with the registry at Book 43362, Page 335. Exh. 1, ¶ 10; Exh. 5.

30. By a foreclosure deed recorded July 18, 2013, with the registry at Book 43362, Page 336 (foreclosure deed), Endeavor conveyed the property to itself. Exh. 1, ¶ 11; Exh. 6.

31. Attached to the foreclosure deed was an affidavit of sale that recited, among other things, the dates of publication of the mortgagee's notice of sale, the date and time of the sale, and the successful bidder (affidavit of sale). Exh. 1, ¶ 12; Exh. 6.

32. The affidavit of sale contained a typographical error that stated the foreclosure sale occurred at 10:00 a.m., instead of stating that it occurred at 1:00 p.m. A scrivener's affidavit correcting the scrivener's error to state that the time of sale was 1:00 p.m. was recorded with the registry on June 28, 2018 at Book 49980, Page 137. Exh. 1, ¶¶ 13, 15; Exhs. 6, 8; Tr. 37.

33. By a deed recorded July 18, 2013 with the registry at Book 43362, Page 341, Endeavor conveyed the property to Ricochet Real Estate LLC (Ricochet). Ricochet is a related entity to Endeavor, and Stenhouse is also the manager of Ricochet. Exh. 1, ¶ 14; Exh. 7; Tr. 22, 29.

34. Approximately a year later, in July 2014, Ricochet sent the Crosbies and Laverty a notice to quit the property. They vacated the property shortly after. Smith still resides at the property. Tr. 64-66, 77-78, 84; view.

Discussion

In the Summary Judgment Order, which is incorporated herein by reference, I found that Endeavor had completed a foreclosure by entry on the first mortgage pursuant to G.L. c. 244, §§1 and 2, as of July 18, 2016, thus foreclosing 23 Londonderry's equity of redemption and vesting full title to the property in Endeavor as of that date. I also found that, with respect to the foreclosure by sale pursuant to G.L. c. 244, §14, that Endeavor had met all notice requirements, but that there was a dispute of fact as to whether the foreclosure sale actually took place on the advertised date for the sale, June 28, 2013. Thus, I could not find in the Summary Judgment Order as a matter of undisputed fact that Endeavor had completed a foreclosure by sale. The question of whether the foreclosure sale had actually taken place as advertised would need to be tried.

The parties agreed at the beginning of trial that the sole issue at trial was "whether the foreclosure sale . . . actually took place as stated in the foreclosure affidavit." Tr. 6. As set forth in my findings of fact, I find that the foreclosure sale did take place at the property on June 28, 2013, at 1:00 p.m. The foreclosure sale was attended by the auctioneer, Fortey, by Stenhouse and attorney Traini on behalf of the mortgagee Endeavor, and by two bidders, Chiles and Stuart. Fortey and the others made entry on the property at the foot of the driveway, and Fortey conducted the auction sale. He planted his flag, registered bidders, and took two bids—an opening bid by Endeavor, a bid by either Chiles or Stuart, and a final bid by Endeavor. The sale was completed by 1:10 p.m.

Nothing in the testimony of Laverty, Crosbie, or Smith contradicts these events. Laverty admitted she was at work on the day of the sale. Smith was out. Crosbie was at the property that day, and testified that she spoke to Stenhouse, attorney Traini, and Fortey just moments after the sale. That Stenhouse's and Crosbie's testimony of what each other said in that conversation differs is not evidence that the conversation did not take place - after six years, it is not surprising that neither has a clear memory of what was said. What is important is that they agree they had a conversation right after the sale.

The defendant makes much of the fact that Crosbie's dog, Cameron, barked loudly whenever anyone approached the property, arguing that the sale could not have taken place as alleged because Cameron would have been barking all through the sale. The evidence is, however, and I find, that Cameron did bark when the sale took place. I find that by the time Crosbie came outside to see what Cameron was barking at, the sale had concluded and Stenhouse, attorney Traini, and Fortey were at the top of the driveway.

In short, I find that the foreclosure sale advertised for June 28, 2013, at 1:00 p.m., took place on the property on June 28, 2013, at 1:00 p.m. As that was the sole issue to be tried and the sole remaining challenge to the validity of Endeavor's foreclosure by sale, I find that Endeavor's foreclosure by sale was properly conducted pursuant to G.L. c. 244, §14, and Endeavor took title to the property by the foreclosure deed recorded July 18, 2013. See O'Brien v. Gove, 208 Mass. 325 (1911) (where sole issue at trial was whether sale was held as advertised, finding that sale did take place confirms foreclosure).

Conclusion

For the foregoing reasons and the reasons set forth in the Summary Judgment Order, judgment shall enter declaring that (a) Endeavor conducted a properly noticed foreclosure sale at the property on June 28, 2013, at which Endeavor was the winning bidder; (b) Endeavor's foreclosure by sale met the requirements of the statutory power of sale and G.L. c. 244, §14; (c) by the foreclosure sale, Endeavor foreclosed 23 Londonderry's equity of redemption under the first mortgage; (d) Endeavor took full and valid title to the property by the foreclosure deed free and clear of the second mortgage and any claims of 23 Londonderry or Smith; and (d) Endeavor completed a foreclosure of the first mortgage by entry on the property pursuant to G.L. c. 244, §§1 and 2, as of July 18, 2016, thus foreclosing 23 Londonderry's equity of redemption and vesting full title to the property in Endeavor as of that date.

Judgment accordingly.