RFF Family Partnership, LP v. Link Development, LLC et al

Filing 214

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER. For the forgoing reasons, 1) JUDGMENT is entered in favor of RFF Family Partnership, LP and against defendant Link Development, LLC, with respect to Count I of the Complaint;2) JUDGMENT is entered in favor of RFF Family Partnership, LP and against defendant Steven A. Ross as trustee of BD Lending Trust, with respect to Count I of the Complaint;3) JUDGMENT is entered in favor of Link Development, LLC and against plaintiff RFF Family Partnership, LP with respect to Count IV of the Complaint;4) the motion for summary judgment of Steven A. Ross as trustee of BD Lending Trust with respect to RFFs claim of slander of t itle (Docket No. 199) is DENIED and5) the motion for summary judgment of RFF Family Partnership, LP with respect to its claim of slander of title (Docket No. 204) is DENIED.A jury trial on Count IV of plaintiffs complaint for slander of title against defendant Steven A. Ross as trustee of BD Lending Trust will commence on Monday, August 14, 2017 in Courtroom 4. So ordered.(Caruso, Stephanie)

United States District Court
District of Massachusetts

RFF Family Partnership, LP
Plaintiff,
v.
Link Development, LLC and
Steven A. Ross, individually
and in his capacity as Trustee
of BD Lending Trust,
Defendants.

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Civil Action No.
14-10065-NMG

MEMORANDUM & ORDER
GORTON, J.
This is the second action (“2014 case”) involving the same
parties related to a convoluted mortgage dispute.

RFF Family

Partnership, LP (“RFF”), the current owner of approximately 22
acres of land in Saugus, Massachusetts (“the property”), seeks
both declaratory and monetary relief against Steven Ross,
individually (“Ross”) and in his capacity as the trustee of the
BD Lending Trust (“BD”), and Link Development, LLC (“Link”).
Link formerly owned the property subject to a mortgage granted
to BD (“the BD Mortgage”).

Without discharging the BD mortgage,

Link borrowed money from RFF and granted RFF a mortgage on the
same property, representing to RFF that there were no other
liens or encumbrances senior to its mortgage.

Link also agreed

that it would not create any new encumbrances on the property
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without RFF’s consent.

Link defaulted on the repayment of its

loan after which RFF foreclosed and bought the property at
auction.
I.

Background
RFF claims that the mortgage granted by Link in favor of BD

is void because it was executed by a now-disbarred attorney,
Stuart Sojcher (“Sojcher”), who lacked authority to sign the BD
Mortgage on behalf of Link.

Sojcher diverted to his own benefit

the proceeds of the loan which the BD Mortgage was intended to
secure.

RFF made a demand upon BD to discharge the BD Mortgage

but BD refused.

As a result, in June, 2011, RFF brought suit in

this Court against both BD and Link, seeking to nullify the BD
Mortgage (“the 2011 case”).

That case resulted in two separate

settlement agreements, one between BD and RFF and the other
between BD and Link.

Only BD was aware of both agreements.

In the Link/BD agreement, Link agreed to dismiss a 2006
Massachusetts Superior Court lawsuit it had filed against BD in
which BD sought a declaration that the BD Mortgage was invalid
because Sojcher lacked authority to execute the mortgage.

In

consideration for the dismissal, BD agreed to pay Link $450,000
up front and at least $650,000 at a later date (the amount
dependent upon the timing of the payments).

To secure BD’s

payment obligation, BD provided Link with an assignment of the

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BD mortgage to be held in escrow and recorded only in the event
of BD’s default.
In the RFF/BD agreement, BD agreed to discharge the BD
Mortgage in exchange for a payment of $140,000 from RFF.

After

executing the agreement, BD informed Link that it intended to
discharge the BD Mortgage in fulfillment of its obligations
under the RFF/BD settlement.

Link, believing that such an

action would be a breach of the Link/BD settlement, recorded the
assignment of the BD Mortgage it had held in escrow.
Because of the recording of the assignment by Link, BD
claimed it no longer held the mortgage and therefore could not
fulfill its obligation under the RFF/BD agreement.

RFF

successfully moved to enforce its settlement agreement with BD
and the Court ordered BD to discharge the mortgage.
nevertheless refused to do so.

BD

Consequently, RFF filed the 2014

case, asserting claims for:
1) declaratory judgment against Link and BD that the BD
Mortgage is void (Count I);
2) breach of contract against BD, seeking damages as a result
of the breach of the RFF/BD settlement agreement (Count II)
3) negligent and/or intentional misrepresentation against Ross
and BD for statements made in connection with the RFF/BD
settlement agreement (Count III);
4) slander of title against Link and BD seeking damages
arising from the failure of Link and BD to discharge the BD
Mortgage (Count IV) and

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5) violation of the Consumer Protection Act (M.G.L. ch. 93A)
against Ross and BD (Count V).
Link and BD filed cross-claims against each other which,
for reasons unimportant to the case at hand, are no longer at
issue.

After the parties filed cross-motions for summary

judgment, the Court entered a Memorandum and Order in which it
concluded that BD had breached the RFF settlement agreement
which it found to be valid.

The Court declined, however,

[to] enter summary judgment on behalf of RFF on the
declaratory judgment with respect to the validity of
the BD Mortgage. While Attorney Sojcher lacked
authority to enter into the BD Mortgage, RFF will be
judicially estopped from denying the validity of the
BD Mortgage. RFF has successfully relied upon its
contention in related cases that the BD Mortgage is
valid and RFF’s decision to settle with BD Lending was
predicated upon such validity.
The Court entered judgment in favor of RFF on Count II
(breach of contract) concluding that, as a matter of law, BD
breached the terms of the settlement agreement.

On Count I

(declaratory relief), however, the Court entered judgment in
favor of Link.1

The Court also entered judgment in favor of Link

on Count IV (slander of title) because that claim was predicated
on the invalidity of the BD Mortgage.

That left Counts III, V

and the issue of damages on Count II to be resolved at trial.
The case went to trial in January, 2015 and the jury found in

1

BD did not move for summary judgment on Counts I and IV.
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favor of RFF on Counts III and V.

It awarded RFF only nominal

damages, however, on each of Counts II, III and V.
After trial, RFF moved for judgment as a matter of law on
the issue of damages awarded under Count II.
the motion.
93A.

The Court denied

RFF also moved for attorneys’ fees under Chapter

The Court denied, in part, and allowed, in part that

motion and granted RFF partial attorneys’ fees.

RFF filed an

appeal with the First Circuit Court of Appeals (“First
Circuit”).
The First Circuit affirmed this Court’s decision with
respect to the award of damages and the award of partial
attorneys’ fees.

It vacated and remanded the Court’s decision

with respect to summary judgment on Counts I and IV.

Those

claims are therefore once again before the Court for
disposition.
In June, 2016, this Court held a status conference and
issued an Order directing:

1) defendants Link and BD to show

cause why judgment should not be entered against them with
respect to Count I, 2) RFF to show cause why judgment should not
be entered against it on Count IV as to Link and 3) RFF and BD
to file cross-motions for summary judgment on Count IV.
The parties’ responses to the show cause order and their
motions for summary judgment are the subjects of this
memorandum.
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II.

Count I:
A.

Declaratory Judgment

BD’s Lack of Response to Show Cause

Defendant BD did not respond to the Court’s Order to show
cause with respect to Count I in RFF’s complaint.

Accordingly,

the Court will enter judgment with respect to Count I against
BD. See Torres-Alamo v. Puerto Rico, 502 F.3d 20, 25 (1st Cir.
2007) (affirming dismissal of plaintiff’s claims because
plaintiff did not comply with the district court’s order to show
cause).
B.

Link’s Response to Show Cause

In response to this Court’s Order to show cause, Link
proffers three arguments as to why judgment should not be
entered against it with respect to Count I:

1) RFF’s claim for

a declaration that the BD mortgage is invalid is barred by the
statute of limitations, 2) RFF is barred by claim preclusion
from obtaining such a declaration, 3) RFF’s claim is barred by
principles of res judicata and 4) Link ratified the BD Mortgage,
which in turn, validated the mortgage.
With respect to Link’s first three arguments, RFF responds,
correctly, that the First Circuit already considered and
dismissed them in its February, 2016 decision. See RFF Family
P’ship, LP v. Ross, 814 F.3d 520, 530-33 (1st Cir. 2016).
Link’s first three arguments are thus unavailing.

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With respect to the ratification argument, Link contends
that it ratified the BD Mortgage when it executed the Link/BD
agreement.

That argument is unpersuasive, however, because “the

fact of settlement cannot be taken” as acquiescence that the
mortgage was valid. See id. at 530.
Link also submits, without citation, that it ratified and
thus, validated, the BD Mortgage because Link (and RFF)
purportedly benefited from $88,000 in taxes that BD paid from
the proceeds of the loan secured by the mortgage.

Because Link

provides no case law in support of its position that the alleged
tax benefit constitutes ratification of the mortgage, and the
Court has found none, the Court concludes that Link has not met
its burden to show cause why judgment should not be entered
against it with respect to Count I. See Sun Life Assurance Co.
of Can. v. Sampson, 705 F. Supp. 2d 122, 124-25 (D. Mass. 2010).
Accordingly, the Court will enter judgment in favor of RFF on
Count I.
III. Count IV:
A.

Slander of Title

RFF’s Claim against Link

This Court directed RFF to show cause why summary judgment
should not enter in favor of Link with respect to RFF’s slander
of title claim in Count IV.

RFF has failed to do so.

RFF contends that the Court’s summary judgment
determination was premised on the finding that the BD Mortgage
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was valid on estoppel grounds.

Although the Court did so

indicate in its previous Memorandum and Order, RFF Family
P’ship, LP v. Link Dev. LLC, 53 F. Supp. 3d 267, 278 (D. Mass.
2014), it also concluded, as a matter of law, that Link had no
knowledge of the truth or falsity of its assignment of the BD
Mortgage. Id. at 277.
Such lack of scienter is sufficient to defeat a claim for
slander of title.

See CMI Assocs., LLC v. Reg’l Fin. Co., LLC,

775 F.Supp.2d 281, 289 (D. Mass. 2011) (false statement must be
made knowingly or with reckless disregard of the truth).
RFF has not shown cause in this instance because it
provides no new explanation to overcome the Court’s earlier
conclusion that Link had no knowledge of the illegitimacy of its
assignment of the BD Mortgage. See Sun Life, 705 F. Supp. 2d at
124-25.

Therefore, the Court will enter summary judgment in

favor of Link with respect to Count IV of the complaint.
B.

RFF’s Claim against BD

In response to this Court’s directive, RFF and BD both
moved for summary judgment on Count IV (slander of title).
BD proffered two arguments in support of its motion for
summary judgment:

1) RFF’s claim is barred by the statute of

limitations and 2) RFF failed adequately to allege malice.
With respect to the first argument, RFF responds that its
claim is not barred by the statute of limitations because it is
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premised on BD’s failure to discharge its lien.
agrees.

The Court

RFF’s claim is not time-barred because BD refused to

discharge its lien on or about June 22, 2011.

RFF filed its

complaint on January 10, 2014, which is within the three-year
limitations period. See RFF Family P’ship, 814 F.3d at 531
(concluding that RFF’s slander of title claim against Link was
not time-barred at least partly because RFF could not have
asserted such a claim until it acquired title to the subject
property in June, 2011).
Second, BD avers, without citation, that failing to
discharge a mortgage does not constitute malice for the purposes
of a slander of title claim.

RFF disagrees and cites cases from

other jurisdictions. See, e.g., Bank One, Mich. v. Karkoukli’s
Inc., Docket No. 249023, 2005 WL 473891 (Mich. App. Ct. Mar. 1,
2005) (per curiam).

Although Massachusetts law controls, there

is a paucity of case law on slander of title in that
jurisdiction so the Court will consider law from other
jurisdictions. Fischer v. Bar Harbor Banking & Tr. Co., 673 F.
Supp. 622, 625 (D. Me. 1987) (“[S]ince there is a dearth of
Maine authority [on slander of title], it is necessary to look
to the common law of other jurisdictions.”), aff’d, 857 F.2d 4
(1st Cir. 1988).
At this stage, the Court cannot determine definitively, as
matter of law, whether BD acted (or did not act) with malice in
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failing to discharge the mortgage.

Genuine disputes of fact

exist, for example, as to recklessness of BD’s refusal to
investigate the statements of Jeffrey Karll, a purported manager
of Link, who informed BD that Sojcher could not authorize the
mortgage. See Joyce v. Globe Newspaper Co., 245 N.E.2d 822, 826
(Mass. 1969) (“As the cases show, malice . . . [is a] question[]
of fact for the jury if there is a basis for divergent views.”).
Accordingly, the Court will deny both cross-motions for
summary judgment on Count IV, the slander of title claims.

ORDER
For the forgoing reasons,
1)

JUDGMENT is entered in favor of RFF Family
Partnership, LP and against defendant Link
Development, LLC, with respect to Count I of the
Complaint;

2)

JUDGMENT is entered in favor of RFF Family
Partnership, LP and against defendant Steven A. Ross
as trustee of BD Lending Trust, with respect to Count
I of the Complaint;

3)

JUDGMENT is entered in favor of Link Development, LLC
and against plaintiff RFF Family Partnership, LP with
respect to Count IV of the Complaint;

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4)

the motion for summary judgment of Steven A. Ross as
trustee of BD Lending Trust with respect to RFF’s
claim of slander of title (Docket No. 199) is DENIED
and

5)

the motion for summary judgment of RFF Family
Partnership, LP with respect to its claim of slander
of title (Docket No. 204) is DENIED.

A jury trial on Count IV of plaintiff’s complaint for
slander of title against defendant Steven A. Ross as trustee of
BD Lending Trust will commence on Monday, August 14, 2017 in
Courtroom 4.

So ordered.

/s/ Nathaniel M. Gorton
d
Nathaniel M. Gorton
United States District Judge
Dated February 28, 2017

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