CROWD LENDING FUND ONE, LLC vs. BOO BOO LLC and BERNARD LAVERTY

The Court has reviewed plaintiff Crowd Lending Fund One, LLC's ("Crowd Lending") Motion for Entry of a Default Judgment and its Supplemental Memorandum in support of that motion. Upon consideration of the motion and the supplemental memorandum, the Court GRANTS Crowd Lending's motion for entry of a default judgment in part and DENIES the motion in part.

Crowd Lending's complaint contains seven counts. Count I is styled as a claim to "quiet title" with respect to a property at 117 Arnold Road in Marshfield, Massachusetts, a property that's allegedly subject to a mortgage held by Crowd Lending. This Court is no stranger to quiet-title actions. See M.G.L. c. 240, §§6-10. Crowd Lending has proved enough undisputed proof to warrant a declaration that Crowd Lending indeed holds, and is entitled to enforce, a valid mortgage in 117 Arnold Road. The Court will thus enter a judgment quieting the title to 117 Arnold Road that Crowd Lending has obtained via its mortgage. (The Court will enter the judgment notwithstanding the Acts of 2020, c. 65, an emergency act that imposes a moratorium on certain foreclosure activities. That moratorium applies only to a "residential property as defined in section 35B of . . . chapter 244 [of the General Laws] that is not vacant or abandoned . . . ." St. 2020, c. 65, §5(a). Chapter 244, §35B(a) excludes from the definition of "residential property" "property taken in whole or in part as collateral for a commercial loan." Exhibits B, D, E, F and G to Crowd Lending's Verified Complaint show that Crowd Lending's mortgage in 117 Arnold Road is collateral for a commercial loan Crowd Lending provided to defendant Boo Boo LLC.)

The Court lacks subject-matter jurisdiction over the remaining six counts of Crowd Lending's Verified Complaint. Count II is a claim for "breach of contract." (Count II actually claims breach of contracts, the contracts being Boo Boo's promissory note to Crowd Lending and defendant Bernard Laverty's guarantee of that note.) Count V is an action for a "deficiency judgment," but that's just another way of framing a claim for damages under Boo Boo's promissory note and Mr. Laverty's guarantee. As a general rule, the Land Court lacks subject-matter jurisdiction over contract claims, and Crowd Lending has not pointed the Court to any exception to the general rule that would apply here. See Siqueria v. Greenwood, 25 LCR 643 , 644 (2017) (Long, J.). The Court thus lacks subject-matter jurisdiction over Counts II and V.

Counts III (claim for entry of a conditional judgment), IV (foreclosure following entry of conditional judgment) and VI (declaration of possession, if and when Crowd Lending holds a foreclosure sale) arise in this case under M.G.L. c. 244, §§1, 5 and 11. Those statutes provide a mechanism under which a mortgagee may obtain a "conditional judgment" against a defendant who's liable on a mortgage. The entry of a conditional judgment starts a clock for the defendant to pay the judgment (and thereby have the mortgage declared "void" and "discharged," see id. at §5) or else lose the mortgaged property via a judicially ordered foreclosure sale, if the mortgage contains a power of sale (see id. at § 11). By order dated July 3, 2020, the Court stated without explanation that the Court had subject-matter jurisdiction over Count III, but the Court questioned its jurisdiction over Counts IV and VI. Separating Count III from Counts IV and VI was a mistake, given that (a) in this case, all three counts arise from Crowd Lending's invocation of its rights under c. 244 of the General Laws; and (b) nothing in c. 244 addresses subject-matter jurisdiction. In other words, the Land Court either has subject-matter jurisdiction over all of Counts III, IV and VI, or none of them.

So does the Land Court have subject-matter jurisdiction over Crowd Lending's c. 244 counts? The Court concludes it does not. The Land Court is a "statutory court, not of general but of strictly limited jurisdiction." Riverbank Improvement Co. v. Chapman, 224 Mass. 424 , 425 (1916). The principal source of this Court's subject-matter jurisdiction is M.G.L. c. 185, §1. Under that statute, this Court has exclusive original jurisdiction over the matters listed in §§1(a)-1(j1/2), original jurisdiction concurrent with the Supreme Judicial Court and the Superior Court over the matters listed in §§1(k)-1(s), and original jurisdiction concurrent with the probate courts over petitions to partition, as described in §1(t).

Virtually each of §1's subparagraphs refers to a specific statute or statutes that grant parties a right of action. [Note 1] Missing from those subparagraphs is any mention of c. 244. The Court infers from this silence that the Legislature did not intend to give this Court jurisdiction over claims arising under c. 244. See Skawski v. Greenfield Investors Prop. Dev. LLC, 473 Mass. 580 , 588-591 (2016) (applying the maxim "expressio unius est exlusio alterius," or "the expression of one thing in a statute is an implied exclusion of other things not included in the statute," to whether the Land Court enjoys exclusive subject-matter jurisdiction over permit appeals described in c. 185, §3A). The Court also does not find within c. 244 itself any express grant of subject-matter jurisdiction to this Court.

There's one further indication that the Legislature hasn't granted this Court subject-matter jurisdiction to issue conditional judgments. Defendants have long had the right, after a conditional judgment issues, to request that a jury to hear any disputes as to what the defendant truly owes on the mortgage that gave rise to the judgment. See Slayton v. McIntyre, 77 Mass. 271 (1858) (construing former Mass. Gen. Stats. c. 107, §§3 and 5); Foss v. Hildreth, 92 Mass. 76 (1865) (applying former Mass. Gen. Stats. c. 140, §5). Both Slayton and Foss predate the inception of the Land Court, and when the Legislature finally created the Land Court, the Legislature deprived it of the power to hold trials by jury. (See M.G.L. c. 185, §25, the current incarnation of the jury-trial prohibition.) By contrast, (a) the Superior Court is a court of general jurisdiction (see M.G.L. c. 212, §4), meaning it has the power to hear c. 244 claims; and (b) the Superior Court routinely conducts jury trials. (In fact, if a question in a Land Court case requires a jury's consideration, the Land Court must refer the question to the Superior Court, and it must hold any "jury trial thereon." See c. 185, §15.) Given that the Legislature hasn't equipped the Land Court with juries, it stands to reason that the Legislature hasn't given the Land Court the power to issue conditional judgments under c. 244.

In response to arguments like these, Crowd Lending (quoting Sullivan v. Kondaur Capital Corp., 2013 WL 312393, at *3 (Mass. Land Ct. Jan. 25, 2013) (Grossman, J.)) argues that the Land Court "may address damage requests that are ancillary to an underlying real property dispute. . . ." But Crowd Lending overlooks the remainder of the sentence it quotes: Sullivan refused plaintiffs' motion to amend their complaint, to add claims pertaining to the alleged mishandling of their loan and mortgage, because they were "independent contract claims of the so[r]t that lie beyond the subject matter jurisdiction of the Land Court." Id. (brackets and emphasis added).

Sullivan cites as an example of a proper "ancillary" case, over which the Land Court has jurisdiction, Essex Co. v. Goldman, 357 Mass. 427 (1970). There the Supreme Judicial Court allowed the Land Court to render a judgment for unpaid rent - rent that was due pursuant to a covenant contained in a deed -- where the defendants' only ground for not paying rent was their contention that the covenant wasn't enforceable. The Land Court rejected that defense. The Supreme Judicial Court thus allowed the Land Court to order payment of rent so as to "determine ‘the whole controversy between the parties'" and not leave for future determination any "issue reasonably raised by the bill and prayers for relief. . . .'" Id. at 434, quoting Vesce v. Gottfried, 353 Mass. 568 , 569 (1968). Crowd Lending's conditional-judgment counts aren't comparable to the rent issue in Essex Co., and are more like the rejected, non-jurisdictional claims in Sullivan.

The Court thus holds that the Land Court lacks subject-matter jurisdiction to issue conditional judgments and order related relief under c. 244, §§1, 5 and 11. The Court thus has no jurisdiction over Counts III, IV and VI of Crowd Lending's Verified Complaint. That leaves Count VII of the Verified Complaint. In that Count, Crowd Lending seeks a declaratory judgment that it may enforce a contract under which Boo Boo assigned to Crowd Lending all rents from 117 Arnold Road. Crowd Lending asserts that the Land Court has jurisdiction over Count VII pursuant to M.G.L. c. 231A, §1, which gives the Land Court authority to "make binding declarations of right, duty, status and other legal relations . . . in any case in which an actual controversy has arisen and is specifically set forth in the pleadings . . . ." Chapter 231A, §1 is not, however, a jurisdictional statute: it describes only what a court may do if it has subject-matter jurisdiction over the claims before it. See Konstantopoulos v. Town of Whately, 384 Mass. 123 , 127-128 (1981). As noted earlier, the Land Court doesn't have broad jurisdiction over contractual disputes, even contracts for assignment of rents.

In its Supplemental Memorandum, Crowd Lending suggested that were the Court to hold that it lacked subject-matter jurisdiction over some of the claims in Crowd Lending's Verified Complaint, Crowd Lending wished to dismiss those claims voluntarily. The Court GRANTS that request, and will dismiss Count II-VII without prejudice, for lack of subject-matter jurisdiction.

Judgment to enter accordingly.

SO ORDERED.