Zea v. JPMorgan Chase Bank, N.A. et al

Filing 56

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting 34 Motion for Summary Judgment; denying 36 Motion for Partial Summary Judgment (Woodlock, Douglas)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
ALISON A. ZEA,
Plaintiff,
v.
JPMORGAN CHASE BANK, N.A.,
and MELIORA HOLDING
CORPORATION,
Defendants.

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CIVIL ACTION NO.
10-11029-DPW

MEMORANDUM AND ORDER
March 22, 2012
Alison Zea (“Zea”) filed suit in Massachusetts Superior
Court, Suffolk County, against JPMorgan Chase Bank (“Chase”) and
Meliora Holding Corporation (“Meliora”) for breach of contract,
declaratory judgment, and violations of Massachusetts General
Laws chapter 93A.

Defendants properly removed the suit to this

court, and have now filed a motion for summary judgment.

For her

part, Zea moved for partial summary judgment on a counterclaim
made by Meliora.

For the following reasons, I (1) grant

defendants’ motion for summary judgment (Dkt. No. 34); and (2)
deny Zea’s motion for partial summary judgment on Meliora’s
counterclaim (Dkt. No. 36).
I.
A.

BACKGROUND

Parties
Alison Zea (“Zea”) is a resident of Naples, Florida, and is

the owner and developer of real property located at 1 Edmunds

Road in Wellesley, Massachusetts.

Since 1995, Zea has been a

real estate developer for approximately ten projects.
JPMorgan Chase Bank, N.A. (“Chase”) is a national
association with headquarters at 111 Polaris Parkway in Columbus,
Ohio.

Meliora Holding Corporation (“Meliora”) is a Delaware

corporation with a principal place of business at 277 Park Avenue
in New York, New York; it is a wholly owned subsidiary of Chase.
B.

Facts
1.

Chase’s Loans to American Home Mortgage Corporation

From 2006 to May 2007, American Home Mortgage Corporation
(“AHM”) and Chase entered into a series of senior secured credit
agreements (the “Warehouse Loans”) for warehousing AHM’s
construction/permanent and residential lot loans.

AHM used the

funding from the Warehouse Loans to fund mortgage loans it
originated.
Under § 8.2. of the Warehouse Loans, AHM was required to put
up the mortgages it was making as collateral for the loan by
delivering their paperwork to a custodian.

Pursuant to section

8.2 of the Warehouse Loans, when AHM requested funding under the
credit agreement the custodian would check to see that the value
of the loans he held was equal to or exceeded the amount AHM had
already borrowed.

If so, then AHM was allowed to borrow up to

the value of the existing loans in the custodian’s possession.
Otherwise, AHM was required to pledge additional loans as
collateral before any further borrowing would be allowed.
2

See

also §§ 4.4 (detailing what happens if outstanding advances
exceed borrowing base), 7.1 (granting Chase a security interest
in the loans pledged as collateral).
In the event that AHM defaulted on the Warehouse Loans,
specifically in this case by failing to pay its obligations and
entering voluntary bankruptcy proceedings, see § 11.1, section
11.3 provided that Chase could do one of five things: “(1)
Foreclose upon or otherwise enforce its security interest in and
Lien on the Collateral” or on portions or elements thereof; “(2)
Notify any or all Servicers (if any) of the Companies’ Pledged
Loans and, at the Agent’s option and in its sole discretion, any
or all Customers obligated under any or all items of Collateral,
that the Collateral has been assigned to the Agent and that all
payments thereon are to be made directly to the Agent or such
other Person as may be designated by the Agent . . . .”; “(3)
Act, or contract with one or more third Persons to act, as
Servicer of each item of Collateral requiring servicing and
perform all obligations required in connection with any Servicing
Agreements to which a Company is a party” for fees; “(4) Exercise
all rights and remedies of a secured creditor under the UCC of
the State of California, the State of Maryland, the State of New
York and any other relevant State, including selling the
interests of the Companies in the Collateral at public or private
sale,” or “(5) Proceed against the Companies, or either of them,

3

on the Senior Credit Notes or any of them with or without, at the
Agent’s election, first proceeding against the Collateral.”
2.

AHM’s Loan to Zea

On March 30, 2007, Zea purchased the property located at 1
Edmunds Road in Wellesley for $1,125,000.

The property contained

a partially-completed house, which Zea intended to renovate.

In

order to pay for the property and the renovations, Zea obtained a
$2,212,500 adjustable rate note from AHM on April 6, 2007.

The

note, secured by a mortgage on the property, required that Zea
make monthly payments on the first of the month beginning
February 1, 2008.

A Construction Loan Addendum amending the Note

was also attached.

In that Addendum, AHM agreed to advance Zea

funds for the renovation project while she made only interest
payments.

An allonge to the Note was attached with the purported

signature of the Senior Vice President of AHM, Andrew Valentine.
On the same day that the Note and Addendum were executed,
Zea entered into a construction loan agreement with AHM.

Section

1.05 of the construction loan agreement governed how advances
would be paid to Zea.

That section stated that as long as no

“Event of Default” had occurred, AHM would advance proceeds of
the loan no more frequently than once per month “as, in the
opinion of [AHM], funds are needed by [Zea] for the payment of
the costs (“Project Costs”) of acquiring, constructing and
equipping the Project, as reflected in the construction budget .
. . .”
4

An “Event of Default” was defined in section 4.01 of the
construction loan agreement to include, in relevant part, “(a) if
[Zea] fails to pay [AHM] when due the principal or interest on
the Loan or any other sum due under this agreement . . . [or] (c)
if [Zea] fails to comply with any of the provisions of this
agreement . . . or any of the other Loan Documents or if any
other default or event of default occurs thereunder.”

If an

“Event of Default” occurred, under Section 4.02 AHM was entitled
to “(a) refuse to make any further Advances; . . . (c) declare
the Note in default and subject to foreclosure and foreclose the
Security Instrument by suit in equity or under power of sale and
foreclose any other of the Security Documents . . . .”
Section 1.05 of the Agreement further specified that
advances would only be paid after an inspection by an AHMselected inspector was completed to AHM’s satisfaction “showing
that the percentage of completion of the construction of the
Project will equal or exceed the percentage of total Loan
proceeds disbursed after taking into account the requested
Advance.”

Finally, section 1.01(l) provided that AHM was

entitled to hold back ten percent of the total value of the note
until all of the conditions in section 3.14 were met.
Specifically, Section 3.14 provides that: “Unless and until [Zea]
has completely satisfied and fulfilled all of the conditions and
requirements of this Section 3.14, [AHM] shall have no duty or
obligation to disburse the Holdback Amount [specified in section
5

1.01(l)].”

Those conditions included the completion of

construction; and delivery of a final survey, a final appraisal
indicating the value of the completed project, and a termite bond
and tax survey.
3.

Zea’s Renovation

During Zea’s renovation, AHM paid out $2,038,040.50 of the
$2,212,500 note, or 92.11% of the total amount of the Note.

On

December 6, 2007, Zea requested the final disbursement under the
Note of $174,459.50.

Pursuant to section 1.05 of the

construction loan agreement, AHM hired Trinity Inspection
Services to inspect the property.

Trinity’s inspection revealed

that as of December 9, 2007, only 61% of the project was
completed.

AHM thereupon denied Zea’s request and the

construction project was never completed.
4.

AHM’s Bankruptcy

AHM defaulted on the Warehouse Loans in August 2007 and
entered Chapter 11 bankruptcy on August 6, 2007.

Neither party

disputes that Zea’s construction loan was one of the loans
pledged by AHM to Chase as collateral.
Shortly after AHM entered Chapter 11 bankruptcy, Chase and
AHM entered a joint stipulation with the bankruptcy court.

That

stipulation allowed Chase to give additional funds to AHM “for
the purpose of completing the construction or improvement of the
Construction Properties, which . . . shall be held in trust for
the benefit of [Chase].”

The stipulation was “without prejudice
6

to the rights of [Chase] . . . with respect to the Warehouse
Facility Collateral, including, without limitation, [Chase]’s
right to seek relief from the automatic stay . . . .”

AHM and

Chase also agreed in the stipulation that “[n]othing contained
herein shall modify, terminate or transfer or be deemed to
effectuate a modification, termination or transfer of [AHM’s]
servicing business, i.e. [AHM’s] rights to service or administer
any mortgage loans and all related activities.

This Stipulation

is without prejudice to any party’s rights regarding the
ownership of the servicing of the Construction/Permanent Loans.”
The bankruptcy judge accepted AHM’s and Chase’s stipulation.
On November 21, 2007, Chase moved for relief from the
automatic stay to foreclose on the construction/permanent loans.
Chase argued that AHM had no equity in the underlying collateral
(the construction/permanent loans) and the loans were not
necessary to AHM’s reorganization, as required for a relief from
stay to issue under section 362(d)(2) of the Bankruptcy Code.
On January 4, 2008, the Bankruptcy Court granted Chase’s
motion.
1.

2.

The Court’s order stated that:
The automatic stay is hereby modified, lifted and
terminated to permit [Chase], in its capacity as
Administrative Agent and Lender, to exercise any
and all of the rights and remedies under the
Warehouse Facility Papers and applicable law that
[Chase] may have with respect to the
Construction/Permanent Loans (including without
limitation with respect to the underlying C/P Loan
Collateral).
This Order shall not prejudice, impair or
otherwise affect any rights, arguments or claims
7

3.

4.

5.

of any kind that [Chase] may have with respect to
the remaining Warehouse Facility Collateral and/or
any other property of the Debtors’ estates under,
among other things, the Warehouse Facility Papers,
any other agreements among [Chase], its
Affiliates, [AHM] and/or their Affiliates, and
applicable law, including without limitation the
right to seek further relief from the automatic
stay from this Court.
Nothing in this Order shall be deemed to be an
admission of liability or waiver of claims of [AHM
or Chase] with respect to any claim or cause of
action arising under or related to the Warehouse
Facility Papers. [Chase] reserves any and all
rights to bring an adversary proceeding or seek
other relief to enforce and protect its rights
under the Warehouse Facility Papers on any and all
bases. [AHM] reserv[es] any and all rights to
contest any and all motions, claims or causes of
action arising from or related to the Warehouse
Facility Papers on any and all bases.
[AHM] shall cooperate with [Chase] to transfer
servicing rights and loan files and otherwise
effectuate this Order to the extent commercially
practicable in light of [AHM’s] status as debtors
in possession.
Transfer of Zea’s Loan to Chase and Meliora

On February 15, 2008, Chase gave notice to AHM to transfer
possession of a number of identified Construction/Permanent Loans
to its affiliate, Meliora Holding Corp.

Chase’s letter noted

that it would “service the Transferred Loans pursuant to
arrangements between Meliora and [Chase], and the Companies are
hereby directed to transfer servicing of the Transferred Loans to
[Chase].”
On March 12, Chase provided notice to Zea that her “Mortgage
Loan has been transferred from American Home Mortgage Corporation

8

to Meliora Corporation. [Chase] has assumed responsibility for
the servicing of your loan for Meliora Corp.”
C.

Proceedings
Zea filed her complaint on May 3, 2010 in the Superior Court

of Suffolk County, Massachusetts claiming breach of contract and
a violation of Massachusetts General Laws chapter 93A.
Defendants removed her suit to federal court under 28 U.S.C. §§
1441 and 1446 on June 17, 2010.

On October 17, 2011, with this

court’s permission, Meliora filed its First Amended Counterclaim
alleging that Zea breached her contract by failing to make her
required monthly payments on the Note.

Defendants then filed a

motion for summary judgment on November 18, 2011.

On the same

day, Zea filed a motion for partial summary judgment on Meliora’s
counterclaim for breach of contract, alleging that Meliora was
not the holder of the Note or a non-holder in possession with the
rights of a holder, and therefore could not sue Zea.
II.

STANDARD OF REVIEW

A movant is entitled to summary judgment when “the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
R. Civ. P. 56(a).

Fed.

“A dispute is genuine if the evidence about

the fact is such that a reasonable jury could resolve the point
in the favor of the non-moving party,” and “[a] fact is material
if it has the potential of determining the outcome of the
litigation.” Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 782
9

(1st Cir. 2011) (citation omitted).

However, “conclusory

allegations, improbable inferences, and unsupported speculation”
are insufficient to create a genuine issue of material fact to
survive summary judgment.

Sullivan v. City of Springfield, 561

F.3d 7, 14 (1st Cir. 2009) (quotation and citation omitted).

I

“view the facts in the light most favorable to the party opposing
summary judgment.”

Rivera–Colón v. Mills, 635 F.3d 9, 10 (1st

Cir. 2011).
III.
A.

DISCUSSION

Zea’s Motion for Partial Summary Judgment
Zea moved for partial summary judgment against Meliora and

claimed that as a matter of law Meliora could not establish that
it was a holder of the Note or a non-holder in possession with
the rights of a holder.

Meliora opposed, arguing in the

alternative that either it is a non-holder in possession with the
rights of a holder, or that there is a genuine issue of material
fact as to whether Meliora is the holder of the Note.
On the record before me, it is clear that Meliora is a nonholder in possession with the rights of a holder.

A party

becomes a non-holder in possession with the rights of a holder if
the Note is “transferred” to that party as defined by
Massachusetts General Laws chapter 106 section 3-203(a).
Mass. Gen. Laws ch. 106 §§ 3-203, 3-301.

See

“An instrument is

transferred when it is delivered by a person other than its
issuer for the purpose of giving to the person receiving delivery
10

the right to enforce the instrument.”
3-203(a).

Mass. Gen. Laws ch. 106 §

Thus, under the statute, a party claiming to be a non-

holder in possession with rights of a holder must show two
things: first, that physical delivery of the Note was made, and
second, that the intent of the transferor was to give the party
“the right to enforce the instrument.”

If both elements are met,

the transfer “vests in the transferee any right of the transferor
to enforce the instrument.”

Id. § 3-203(b).

Zea argues that Meliora cannot show that AHM transferred the
Note for the purpose of giving Meliora “the right to enforce the
instrument.”

Zea claims that the bankruptcy court’s order

granting Chase’s motion for relief from the stay did not effect a
transfer of the right to enforce the Note to Meliora, but instead
was a transfer of only so-called “loan servicing rights.”

In

order to support this claim, Zea misquotes the bankruptcy court’s
order at page 8 of her memorandum in support of her motion for
partial summary judgment.

That misquotation is as follows:

The order ultimately adopted by the bankruptcy court,
consistent with American Home’s position, specifically
reserved to American Home “any and all rights to
contest any and all motions, claims or causes of action
arising from or related to the [underlying collateral]
on any and all bases.” The order instead simply
contemplated that American Home “transfer servicing
rights and loan files and otherwise effectuate this
Order to the extent commercially practicable in light
of the Debtors status as debtors in possession.”
(alterations and emphasis in original).

11

The bankruptcy court’s order, however, gave AHM the right to
“contest any and all motions, claims or causes of action arising
from or related to the Warehouse Facility Papers,” not the
“[underlying collateral]” as Zea’s edited quotation states.
Although Zea argues that “the order ultimately entered by the
bankruptcy court did not grant permission for Chase to foreclose
its lien or security interest and did not require American Home
to assign in toto loans to Chase,” the plain language of the
bankruptcy court’s order states otherwise:
The automatic stay is hereby modified, lifted and
terminated to permit [Chase], in its capacity as
Administrative Agent and Lender, to exercise any and
all of the rights and remedies under the Warehouse
Facility Papers and applicable law that [Chase] may
have with respect to the Construction/Permanent Loans
(including without limitation with respect to the
underlying C/P Loan Collateral).
(emphasis added).

The bankruptcy court then ordered AHM to

“transfer servicing rights and loan files and otherwise
effectuate this Order to the extent commercially practicable.”
As noted above, the Warehouse Loans provided in section
11.3(a) five remedies in the case of an Event of Default.

Two

remedies listed gave Chase the power to “[f]oreclose upon or
otherwise enforce its security interest in . . . the Collateral”
and to “[n]otify any or all Servicers (if any) of [AHM’s] Pledged
Loans and . . . any or all Customers obligated under any or all
items of Collateral, that the Collateral has been assigned to the
Agent and that all payments thereon are to be made directly to
12

the Agent . . . .”

§§ 11.3(c)(1) & (2).

To effectuate these

powers, AHM was ordered to “cooperate with [Chase] to transfer
servicing rights and loan files and otherwise effectuate this
Order to the extent commercially practicable in light of [AHM’s]
status as debtors in possession.”
AHM transferred the Note to Meliora, Chase’s agent, sometime
between February and March, 2008.

The letter from Chase to AHM

about the transfer of the Note identified the Bankruptcy Court
Order and requested that AHM “transfer possession of the
Construction/Permanent Loans identified on the attached trial
balance . . . to JPMorgan’s affiliate, Meliora Holding Corp. . .
. JPMorgan will service the Transferred Loans pursuant to
arrangements between Meliora and JPMorgan, and [AHM is] hereby
directed to transfer servicing of the Transferred Loans to
JPMorgan.”
The Servicing Arrangement between Chase and Meliora gave
Meliora complete control over the Construction/Permanent Loans,
in effect creating an agency relationship.

The Servicing

Arrangement required that Meliora “shall take all actions and
directions with regards to the Construction to Permanent Loans,”
and gave Meliora the ability to fund additional draws under each
Construction/Permanent Loan as Meliora “deems necessary in its
discretion to complete the construction, improve or repair of the
homes.”

Meliora agreed to collect payments from mortgagors and

13

deposit them into separate accounts maintained by Meliora for
each Construction/Permanent Loan.

See generally Adam J. Levitin

& Tara Twomey, Mortgage Servicing, 28.1 YALE J. REG. 1 (2011)
(describing the traditional duties and functions of mortgage
servicers).
The bankruptcy court’s order and the subsequent physical
transfer of the Note to Meliora were therefore sufficient under
section 3-203(a) to make Meliora a non-holder in possession with
the rights of a holder.

The order permitted Chase to “exercise

any and all of the rights and remedies under the Warehouse
Facility Papers,” which allowed Chase to “enforce its security
interest” and notify the mortgagors that their payments should be
made directly to Chase.

AHM was ordered to “cooperate with

[Chase] to transfer servicing rights and loan files and otherwise
effectuate this Order to the extent commercially practicable in
light of [AHM’s] status as debtors in possession.”

In doing so,

AHM “transferred” the Note to Meliora because it physically
delivered the Note to Meliora with the purpose that Meliora would
have the right to enforce the instrument as ordered by the
bankruptcy court.1

Mass. Gen. Laws ch. 106 § 3-203(a).

1

Thus,

Zea argues that a letter from Chase’s counsel admitted that
“the bankruptcy court granted [Chase]’s motion for relief from
the automatic stay for the limited purpose of transferring the
loan servicing rights to [Chase] . . . At no time, however, was
there ever a formal assignment to [Chase] of all rights and
liabilities in connection with the loans . . . .” However, I
need not inquire into extrinsic evidence of the parties’
14

Meliora is a non-holder in possession with the rights of a
holder.

See In re Neals, 459 B.R. 612, 618-19 (Bankr. D.S.C.

2011) (finding that “a loan servicer responsible for collecting
payments on and enforcing the terms of the Note on behalf” of a
bank was a non-holder in possession with the rights of a holder).
Consequently, I will DENY Zea’s motion for partial summary
judgment2
B.

Defendants’ Motion for Summary Judgment
Zea’s original complaint in the Suffolk County Superior

Court charged AHM with breach of contract for failure to fund
Zea’s final construction draw request.

She also claimed that

defendants violated Massachusetts General Laws chapter 93A.
After Meliora removed the case to federal court, it filed a
counterclaim that Zea was in default on the Note.

Chase and

understanding of the bankruptcy court’s order or, as Zea
suggests, the parties’ arguments to the bankruptcy court as
somehow instructing how that court’s order should be understood.
Clear court orders are to be taken according to their unambiguous
terms. Travelers Indem. Co. v. Bailey, 129 S. Ct. 2195, 2205
(2009) (“If it is black-letter law that the terms of an
unambiguous private contract must be enforced irrespective of the
parties’ subjective intent, it is all the clearer that a court
should enforce a court order, a public governmental act,
according to its unambiguous terms.” (citation omitted)). The
bankruptcy court’s order was unambiguous, thus I need not
consider Zea’s extrinsic evidence.
2

Zea also argues that nothing in the record shows that Meliora
is the holder of the Note after a valid negotiation, because she
challenges the authenticity of the signature on the allonge
purporting to assign the Note to Meliora. However, I need not
address this argument, because as noted above, Meliora is at
least a non-holder in possession with the rights of a holder.
15

Meliora then jointly moved for summary judgment in their favor on
both Zea’s complaint and Meliora’s counterclaim.
1.

Summary Judgment on Zea’s Breach of Contract Claim

Zea’s complaint alleges that AHM breached the construction
loan agreement because AHM failed to fund Zea’s last draw request
in December 2007.

Defendants argue that under the unambiguous

terms of the construction loan, AHM did not commit a breach by
declining to fund Zea’s final draw request.
Zea’s claim that AHM breached the construction loan
agreement fails for two reasons.

First, the construction loan in

§ 1.05 provided that AHM could require an inspection “showing
that the percentage of completion of the construction of the
Project will equal or exceed the percentage of total Loan
proceeds disbursed after taking into account the requested
Advance” before allowing any draws to be disbursed to Zea.

After

Zea requested the final draw, AHM had its designated inspector
report on the percentage of completion of the construction
project, pursuant to section 1.05.

The inspector concluded that

at the time of his inspection, the project was only 61% complete,
but 92% of the total loan amount had been paid out.3

3

Because Zea

Even if, as Zea argues, “total Loan proceeds” is ambiguous,
that is insufficient to survive Defendants’ motion for summary
judgment because under any possible definition of the term,
substantially more than 61% of the proceeds had been paid out.
For example, even if total Loan proceeds meant only the total
amount of the loan designated for construction, more than 61% of
the proceeds had been disbursed. The loan was for $2,212,500,
16

could not show that the project was at least as completed as the
percentage of the total Loan proceeds that had been drawn,
section 1.05 of the contract entitled AHM to deny her draw.
Thus, AHM was not in breach of the construction loan agreement
and Zea’s claim fails.
Section 1.01(l), the “Holdback provision,” provides a second
reason why Zea’s claim fails.

That section of the construction

loan provided that AHM was entitled to hold back ten percent of
the total value of the note until all of the conditions in
section 3.14 were met.

See also § 3.14 (“Unless and until [Zea]

has completely satisfied and fulfilled all of the conditions and
requirements of this Section 3.14, [AHM] shall have no duty or
obligation to disburse the Holdback Amount [specified in section
1.01(l)].”).

Section 3.14 required Zea to furnish inter alia a

final as-built survey, a fully paid original hazard insurance
policy, a certificate of occupancy, if applicable, and a “final
appraisal from an independent appraiser . . . indicating the
value of the Project as completed with walks/drives and
landscaping to be at least equal to the Appraised Value . . . .”

and $1,125,000 was for the purchase of the property, leaving
$1,087,500 for construction. As of the time of Zea’s last draw
request, she had already drawn $913,040.50 for construction costs
($2,038,040.50 in total draws minus the $1,125,000 for the
purchase price of the property). Thus, even if total Loan
proceeds meant only that portion of the loan attributable to
construction costs, Zea had already drawn 83.95% of the total
Loan proceeds at the time of her last draw request.
17

§ 3.14.

Zea did not provide any documents indicating that the

projected had been completed; indeed, the entire basis of her
claim is that the project was never completed.
As of Zea’s final draw request, it is undisputed that AHM
had disbursed $2,038,040.50 of the $2,212,500 loan, or
approximately 92% of the total value of the Note.

Zea’s final

request was for $174,459.50, the exact remainder of the available
funds under the Note.

Because the project was not completed and

it is undisputed that Zea did not furnish AHM with the required
surveys and inspections under section 3.14, AHM was not required
to disburse the last $174,459.50 draw.

Thus, Zea’s claim that

AHM breached the construction loan agreement fails, and summary
judgment is appropriate in Defendants’ favor.4
2.

Summary Judgment on Zea’s 93A Claim

Zea’s complaint also claims Defendants violated
Massachusetts General Laws chapter 93A, but it is unclear whether
her claim is premised on AHM’s alleged contract violation or

4

Zea attempts to argue that the holdback provision is
ambiguous, and therefore that summary judgment is inappropriate,
because it is “silent on the precise manner by which the holdback
amount would be withheld, if at all, from the construction draws
made by AHM to Zea.” There is nothing ambiguous about the
holdback provision’s language. See Suffolk Const. Co. Inc. v.
Illinois Union Ins. Co., 951 N.E.2d 944, 948 (Mass. App. Ct.
2011) (“A term is ambiguous only if it is susceptible of more
than one meaning and if reasonably intelligent persons would
differ over the proper meaning.”).
18

Chase and Meliora’s demand on the Note.

Regardless, Zea’s 93A

claim fails.
If Zea’s 93A claim is based on the alleged contract
violation, it fails because neither defendants nor AHM breached
the construction loan agreement, and nothing in the record
supports a finding that any action on the part of either
defendant or AHM was unfair or deceptive.

If Zea’s 93A claim is

based on defendants’ demand for payment of the Note, it fails
because a “good faith dispute as to whether money is owed, or
performance of some kind is due, is not the stuff of which a c.
93A claim is made.”

Northern Sec. Ins. Co. v. R.H. Realty Trust,

941 N.E.2d 688, 692 (Mass. App. Ct. 2011) (quoting Duclersaint v.
Fed. Nat’l Mort. Ass’n, 427 Mass. 809, 814 (1998)).

Thus, under

either scenario, Zea’s 93A claim fails, and summary judgment is
appropriate for defendants.
3.

Summary Judgment on Meliora’s Counterclaim

Zea admits that she signed the Note obligating her to repay
the $2,212,500 Note.

She also admits that she has not made the

required monthly payments on the Note.

Under section 4.01 of the

construction loan agreement, Zea’s failure to pay the principal
or interest on the Note when due is an Event of Default entitling
AHM to declare the Note in default and foreclose on the mortgage.
Because, as noted above, Meliora is a non-holder in possession of
the Note with the rights of a holder, Meliora is entitled to

19

foreclose on the mortgage.

Thus, Meliora is entitled to summary

judgment on its claim that Zea is liable for the $2,038,040.50
principal balance plus interest on the Note.
IV.

CONCLUSION

For the reason set forth above, I GRANT defendants’ motion
for summary judgment (Dkt. No. 34); and DENY Zea’s motion for
partial summary judgment on Meliora’s counterclaim (Dkt. No. 36).

/s/ Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

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