Bank of America , N.A. v. Bankart et al

Filing 168

Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - The Court DENIES BANA's motion for summary judgment against Chase, D. 134, and ALLOWS IN PART and DENIES IN PART as moot Chase's motion for summary judgment against BANA, D. 135 . The Court denies the Bankart Defendants' motion, D. 139, and allows BANA's motions against them. D. 39; D. 133. In light of the Court's ruling on BANA and Chase's cross-motions, BANA's motion to strike Chase's exper t affidavit is DENIED as moot, D. 159, as the Court did not rely on the affidavit in resolving the pending motions. The Court orders the parties to meet and confer in light of this ruling and file a status report by May 29, 2019 indicating what, if any, further deadlines, proceedings and/or form of judgment the Court should enter in this matter. (Hourihan, Lisa)

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UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
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BANK OF AMERICA, N.A.,
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Plaintiff,
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v.
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Case No: 16-cv-11583-DJC
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BARNES HILL LLC,
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ALAN J. BANKART,
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DIANE K. BANKART, and
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JPMORGAN CHASE BANK, N.A.,
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Defendants.
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)
__________________________________________)
MEMORANDUM AND ORDER
CASPER, J.
I.

May 13, 2019

Introduction
Plaintiff Bank of America, N.A. (“BANA”) has filed this lawsuit against Defendants Alan

J. Bankart and Diane K. Bankart (the “Bankarts”) and their company, Barnes Hill, LLC (“Barnes”)
(collectively, the “Bankart Defendants”), in connection with BANA’s interest in a line of credit
agreement entered in 2000 and secured by a mortgage on the Bankarts’ property. D. 50. BANA
also seeks a declaration that, among other things, BANA’s mortgage takes priority over any
interest that JPMorgan Chase Bank, N.A. (“Chase”) may have arising from the later 2006
refinancing agreement with the Bankarts. Id. Chase and the Bankart Defendants, in turn, filed
counterclaims against BANA and crossclaims against one another. D. 52; D. 67; D. 68. BANA
has moved for partial summary judgment on Chase’s counterclaims, D. 134, and BANA’s claims

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and counterclaim against the Bankart Defendants, D. 39; D. 133.1 The Bankart Defendants filed
a motion for summary judgment with respect to their counterclaims against BANA. D. 139.
Finally, Chase has moved for summary judgment on its counterclaims and an affirmative defense
against BANA. D. 135. For the reasons stated below, the Court DENIES BANA’s motion for
summary judgment against Chase, D. 134, and ALLOWS IN PART and DENIES IN PART as
moot Chase’s motion for summary judgment against BANA, D. 135. The Court DENIES the
Bankart Defendants’ motion, D. 139, and ALLOWS BANA’s motions against the Bankart
Defendants, D. 39; D. 133.
II.

Standard of Review
The Court grants summary judgment where there is no genuine dispute as to any material

fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(a). “A fact is material if it carries with it the potential to affect the
outcome of the suit under the applicable law.” Santiago–Ramos v. Centennial P.R. Wireless Corp.,
217 F.3d 46, 52 (1st Cir. 2000) (quoting Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)).
The movant “bears the burden of demonstrating the absence of a genuine issue of material fact.”
Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). If the movant meets its burden, the non-moving party may not rest merely on the
allegations or denials in her pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986),

1

On September 27, 2017, the Court denied without prejudice BANA’s partial motion for summary
judgment against the Bankarts. D. 63 (denying D. 39). On November 13, 2018, BANA,
nonetheless, filed a supplemental memorandum in support of that motion. D. 133. The
supplemental memorandum, D. 133, relies upon the statement of material facts set forth in
BANA’s original memorandum in support of summary judgment against the Bankarts, D. 40, and
cites to the exhibits filed as attachments thereto, see, e.g., D. 40-1; D. 40-2. Given the stage of the
litigation and the other pending motions for summary judgment, the Court will treat BANA’s
supplemental memorandum as a pending renewed motion for summary judgment and considers
the previously filed statement of material facts and exhibits for the purpose of resolving the same.
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but “must, with respect to each issue on which she would bear the burden of proof at trial,
demonstrate that a trier of fact could reasonably resolve that issue in her favor,” Borges ex rel.
S.M.B.W. v. Serrano–Isern, 605 F.3d 1, 5 (1st Cir. 2010). “As a general rule, that requires the
production of evidence that is ‘significant[ly] probative.’” Id. (alteration in original) (quoting
Anderson, 477 U.S. at 249). The Court “view[s] the record in the light most favorable to the
nonmovant, drawing reasonable inferences in his favor.” Noonan v. Staples, Inc., 556 F.3d 20, 25
(1st Cir. 2009). “When deciding cross-motions for summary judgment, the court must consider
each motion separately, drawing inferences against each movant in turn.” Reich v. John Alden
Life Ins. Co., 126 F.3d 1, 6 (1st Cir. 1997).
III.

Factual Background
These relevant facts are drawn from the statements of material fact and supporting

documents and are undisputed unless noted otherwise. On November 7, 1997, the Bankarts
purchased a property on Weetamo Road, Nantucket, Massachusetts (the “Property”). D. 140 ¶ 1;
D. 139-1; D. 145 ¶ 1. In May 2000, the Bankarts transferred the Property by quitclaim deed to
Defendant Barnes, D. 140 ¶ 2; D. 139-2; D. 145 ¶ 2, a company owned by the Bankarts, D. 140 ¶
4; D. 139-3 at 10-11; D. 145 ¶ 4. Shortly thereafter, the Bankarts executed an agreement with
Fleet Bank in which they received a $4 million line of credit (the “Fleet Line Agreement”). D. 40
at 2; D. 40-1 at 6-8; see D. 152 ¶ 4 (acknowledging that the Bankarts received a “four million
dollar credit facility” from Fleet Bank). Prior to the institution of this litigation, BANA was unable
to locate the loan origination file or the original Fleet Line Agreement. D. 40 at 4; D. 40-1 at 3.
On August 8, 2018, however, BANA located the original Fleet Line Agreement and invited the
parties to inspect the same. D. 147-1 at 1-7; D. 147-2 at 2, 6. According to BANA, as of the time

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the original Agreement was filed with the Court, the Bankarts had not responded to BANA’s offer
to make it available for inspection. D. 147 at 2, 6.
The Fleet Line Agreement, including the $4 million line of credit, was secured by a
mortgage on the Property. D. 40 at 2; D. 40-4 at 2 (indicating in document entitled “Fleet Bank
Open-End Mortgage” that the line of credit at issue was secured by a mortgage on a property at “1
Weetamo Rd, Nantucket, MA 02554”). The Bankarts deny that the Fleet Line Agreement was
secured by a mortgage on the Property, D. 152 ¶ 6, but do not otherwise dispute the authenticity
of the mortgage document, D. 152 ¶ 8. The Bankarts signed the mortgage on behalf of Barnes,
which is listed as the “mortgagor/borrower.” D. 40-4 at 6; see D. 40 at 2; D. 152 ¶ 7. The mortgage
was recorded on April 26, 2002. D. 40-4 at 2.
BANA asserts that it merged with Fleet Bank on or about March 8, 2004, D. 40 at 3; D.
40-5, and, thus, BANA inherited the Bankarts’ mortgage (“BANA Mortgage”). Following the
merger, the Bankarts issued repayments pursuant to the Fleet Line Agreement to BANA. D. 40 at
3; D. 40-2 at 38-39 (acknowledging receipt of monthly statements from Bank of America “from
when [the Bankarts] first re-drew the line [of credit] down starting in 2006 through 2014”); D. 152
¶ 11. At some point in or around 2014, the Bankarts ceased making payments to BANA. D. 40
at 3; D. 40-2 at 39; D. 152 ¶ 12. Although the Bankarts acknowledge that “they owe [BANA]
approximately $4 million,” they “dispute . . . whether their obligations to pay this debt is subject
to the Fleet Line Agreement[] or whether the Fleet Line Agreement is enforceable.” D. 152 ¶ 12.
On November 7, 2005, Alan Bankart informed Washington Mutual (“WaMu”) that he
intended to refinance the Property to pay off a “home equity line” with BANA. D. 154 ¶ 10; D.
154-1 at 46; D. 157 ¶ 10. Shortly thereafter, WaMu sent the Bankarts a commitment letter
indicating that WaMu had approved their application for a residential mortgage loan secured by

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the Property. D. 134 at 3; 134-6 at 2. The commitment letter also states that WaMu shall have
“no obligation [pursuant to the pending mortgage agreement] unless all the foregoing conditions
have been satisfied in full, all required documents are signed, and funds actually disbursed on or
prior to December 14, 2005.” D. 134-6 at 2. One of the conditions required the Bankarts to provide
evidence that their BANA debt was “paid in full at closing and security interest released.” Id. at
3. A similar commitment letter, dated January 17, 2006, reiterated this condition. D. 154 ¶ 12; D.
134-7 at 2; D. 157 ¶ 12. According to Chase, as part of the refinancing process, BANA sent WaMu
a payoff statement identifying the Bankarts’ outstanding balance and the Bankarts’ executed loan
modification agreement, which requested that BANA block and close their line of credit upon
receipt of payment in full. See D. 154 ¶ 13 (stating that BANA sent WaMu a copy of the Bankarts’
payoff statement); D. 154 ¶¶ 24-25 (stating that BANA sent WaMu a copy of the Bankarts’
executed modification agreement, which instructs BANA to block the Bankarts’ account and close
it when the outstanding balance is paid to zero). BANA denies sending these documents to WaMu.
D. 157 ¶¶ 13, 24-25.
On or about January 19, 2006, Barnes and WaMu executed a promissory note in the amount
of $5 million secured by a mortgage on the Property. D. 154 ¶ 16; D. 154-1 at 64-89; D. 157 ¶ 16.
The Bankarts signed the promissory note on behalf of Barnes. D. 154-1 at 80. That same day
WaMu generated lender closing instructions, advising the Bankarts’ settlement agent, Glidden &
Glidden, P.C., that it was not authorized to disburse the proceeds from the pending agreement until
the Property was cleared of “all liens and encumbrances to ensure that the Lender holds a valid
first lien position.” D. 134 at 5; D. 134-8 at 3. On or around January 20, 2006, the Bankarts
executed a request to terminate their BANA line of credit, which had a payoff balance of over $4
million. D. 154 ¶ 18; D. 154-1 at 91-92; D. 157 ¶ 18. As part of the termination process, the

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Bankarts requested that BANA block and close their line of credit account from further use
“immediately” and terminate the same upon receipt of payoff. D. 154 ¶ 19; D. 154-1 at 96; D. 157
¶ 19. Chase alleges, and BANA disputes, that BANA sent the Bankart’s request for termination
to Chase. D. 154 ¶ 21; D. 157 ¶ 21.
The WaMu mortgage was recorded on January 25, 2006. D. 154 ¶ 27; D. 157 ¶ 27. That
same day, WaMu wired $4,013,649.24 to BANA. D. 154 ¶ 28; D. 157 ¶ 28. At the time, WaMu
understood that its mortgage on the Property was in “first position,” D. 134-5 at 17 (confirming
that WaMu believed “the title [to the Property] cleared of all liens and encumbrances such that
Washington Mutual held the first lien position . . . since [WaMu] had just paid off $4 million to
Bank of America”), but took no affirmative action with BANA or the Bankarts to confirm the
same, D. 144-1 at 14-15 (stating there was no indication from WaMu’s files that it took steps to
confirm that BANA discharged a mortgage on the Property).
Because WaMu overpaid on the outstanding balance, BANA provided a refund of slightly
more than $3000 to the Bankarts on February 2, 2006. D. 154 ¶ 33; D. 142-3 at 15; D. 157 ¶ 33.
Per BANA’s policy, a block should have been placed on the Bankart’s’ account upon receipt of
the refund, which zeroed the balance of the line of credit. D. 154 ¶ 34; D. 154-1 at 58 (explaining
that “the block should have been placed on [the account] at that time” but “[u]nfortunately, it
wasn’t done timely”); D. 157 ¶ 34. BANA, however, did not close or block the account. D. 154
¶ 34; D. 154-1 at 58; D. 157 ¶ 34. On February 15, 2006, the Bankarts began to withdraw funds
from the line of credit. D. 154 ¶ 35; D. 142-3 at 15; D. 157 ¶ 35. Because the Bankarts utilized
the line of credit prior to BANA closing the account, BANA was unable to block the account and
discharge the BANA Mortgage. D. 154 ¶ 38; D. 154-1 at 58; D. 157 ¶ 38. The Bankarts eventually

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withdrew $4 million, including the sum recently paid off by Chase, on the line of credit. D. 154 ¶
41; D. 142-3 at 15-19; 157 ¶ 41.
Upon the dissolution of WaMu in September 2008, the WaMu Mortgage was assigned to
Chase. D. 154 ¶ 44; D. 154-1 at 107; D. 157 ¶ 45. The Bankarts ceased making payments after
November 2012. D. 134 at 7; D. 134-5 at 27. Between 2012 and 2016, Chase delayed initiating
foreclosure proceedings as part of its loss mitigation effort with the Bankarts. D. 134-5 at 30. On
or about August 29, 2016, during initial foreclosure proceedings on the Bankarts’ Property, Chase
learned from BANA that BANA had not blocked the Bankarts’ line of credit account following
the January 2006 refinance. D. 154 ¶ 51; D. 157 ¶ 51; see D. 134-5 at 34 (explaining that Chase
learned the BANA mortgage continued to burden the Property after running a title search during
foreclosure proceedings and receiving confirmation from BANA that the Bankarts’ line of credit
account had an outstanding balance).
IV.

Procedural History
BANA instituted this action on August 3, 2016. D. 1. In June 2017, Chase filed a related

action in Nantucket Land Court, which BANA removed to this Court. D. 54 at 2. On August 25,
2017, BANA move to consolidate the action, D. 62, which the Court allowed, D. 62. BANA filed
a second amended complaint. D. 50. Chase and the Bankart Defendants filed counterclaims
against BANA and crossclaims against one another. D. 52; D. 67; D. 68. BANA has now moved
for partial summary judgment against Chase, D. 134, and the Bankart Defendants, D. 39; D. 133.
The Bankart Defendants filed a motion for summary judgment against BANA. D. 139. Chase has
moved for summary judgment against BANA. D. 135. The Court heard the parties on the pending
motions on January 17, 2019 and January 24, 2019 and took these matters under advisement. D.

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161; D. 163. BANA and Chase filed supplemental memoranda of law concerning Chase’s
counterclaims. D. 164; D. 165; D. 166.
V.

Discussion
A.

Chase’s Counterclaims Against BANA

The Court will first address BANA and Chase’s motions for summary judgment on Chase’s
counterclaims seeking equitable subrogation (Count I), a declaratory judgment that the Chase
Mortgage has priority over the BANA Mortgage (Count II), promissory estoppel (Count III) and
a counterclaim for “breach of contract, third-party beneficiary, breach of warranty and
representation” (Count IV).
1.

BANA’s Motion for Summary Judgment Satisfies Local Rule 56.1

Chase initially contends that BANA’s motion for summary judgment is “procedurally
improper” because BANA’s statement of material facts is not consistent with Local Rule 56.1. D.
153 at 5. Rule 56.1 provides, in relevant part, that “[m]otions for summary judgment shall include
a concise statement of the material facts of record as to which the moving party contends there is
no genuine issue to be tried, with page references to affidavits, depositions and other
documentation.” L.R. 56.1. Chase opines that BANA’s statement of material facts is “rife” with
statements that do not cite to supporting documentation, as well as legal arguments and legal
conclusions. D. 153 at 5. The Court has broad discretion to accept a party’s statement of material
facts as stated. See Caban Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 7 (1st Cir. 2007).
Here, the Court has not relied upon unsupported assertions or legal conclusions in reaching its
decision and declines to deny BANA’s motion for summary judgment on this ground.

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2.

Chase’s Counterclaims are Not Time-Barred

In support of its motion for summary judgment, BANA asserts that the operative statutes
of limitations bar Chase’s counterclaims. D. 134. With respect to the equitable subrogation claim,
BANA urges the Court to adopt the six-year statute of limitations for breach of contract claims.
Chase contends that claims for equitable subrogation are comparable to actions for the recovery of
interest in land and, therefore, entitled to the twenty-year statute of limitations set forth in Mass.
Gen. L. c. 260, § 21. The Court is not persuaded that the statute of limitations for breach of contract
actions applies to equitable subrogation claims.
In Massachusetts, courts have distinguished equitable subrogation claims from contract
actions and applied the twenty-year statute of limitations to such claims. See United Mortg.
Servicing, LLC v. Long, No. 984870, 2004 WL 1926329, at *6 (Mass. Super. June 22, 2004)
(explaining that claims for “equitable subrogation . . . are not barred by the six-year statute of
limitations . . . because they are not contract actions”), aff’d sub nom. United Mortg. Servs., LLC
v. Long, 66 Mass. App. Ct. 1107 (2006)). BANA appears to argue that United Mortg. Servicing
is inapplicable here because Chase’s requested relief, i.e., prioritization of its mortgage over
BANA’s mortgage on the Property, purportedly sounds in contract rather than “a petition for
recovery of land or an effort to revive a dormant or discharged interest in land.” D. 158 at 6. In
Deutsche Bank National Trust Co. v. Gibb, No. MICV201301110, 2016 WL 10077153 (Mass.
Super. Feb. 3, 2016), however, the court relied upon United Mortg. Servicing in holding that the
twenty-year statute of limitations applies where, as here, a mortgagee pressed an equitable
subrogation claim to secure its position as senior lien holder on a property. Deutsche Bank, 2016
WL 10077153, at *2 (quoting United Mortg. Servicing in declining to apply the six-year statute of
limitations for breach of contract claims to a mortgagee’s claim for equitable subrogation and

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declaratory relief). Like the mortgagee in Deutsche Bank, Chase seeks to establish its lien on the
Property through equitable subrogation.
Because Chase’s declaratory judgment counterclaim seeks the same relief as the equitable
subrogation counterclaim, the former has the same statute of limitations applicable to the latter.
See Gilbert v. City of Cambridge, 932 F.2d 51, 58 (1st Cir. 1991) (explaining that where “a claim
for declaratory relief could have been resolved through another form of action which has a specific
limitations period, the specific period of time will govern”) (quoting Town of Orangetown v.
Gorsuch, 718 F.2d 29, 42 (2d Cir. 1983)). Accordingly, Chase’s counterclaims for equitable
subrogation and declaratory judgment are entitled to a twenty-year statute of limitations.2 Even
assuming the earliest conceivable accrual date relevant to this action, Chase has asserted its
equitable subrogation and declaratory relief counterclaims within the twenty-year statute of
limitations. Accordingly, those counterclaims are not time-barred.
There is no dispute that a six-year statute of limitations applies to Chase’s breach of
contract and promissory estoppel counterclaims. The parties disagree as to when the applicable
statute of limitations accrued. Under the Massachusetts discovery rule, the limitation period
accrues when the plaintiff has “knowledge or sufficient notice of two related facts: (1) that [it]
was harmed; and (2) that [the] harm was caused by the defendant’s conduct.” Harrington v.
Costello, 467 Mass. 720, 725 (2014). “A plaintiff may be put on ‘inquiry notice’ where it is
informed of facts that would suggest to a reasonably prudent person in the same position that an
injury has been suffered as a result of the defendant’s conduct.” Commonwealth v. Tradition (N.

2

BANA and Chase submitted supplemental briefs addressing Beaconsfield Towne House
Condominium Trust v. Zussman, 401 Mass. 480 (1988), see D. 164; D. 165; D. 166, lends some
further support to Chase’s position regarding the application of the twenty-year statute of
limitations.
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Am.) Inc., 91 Mass. App. Ct. 63, 71 (2017). Accordingly, the applicable statute of limitations
begins to run on the date of the “first event reasonable likely to put the plaintiff on notice that the
defendant’s conduct . . . caused [its] injury.” AA & D Masonry, LLC v. S. St. Bus. Park, 93 Mass.
App. Ct. 693, 699 (2018).
BANA asserts that Chase’s contract-based counterclaims are time-barred because they
accrued “immediately” following the completion of the refinancing in January 2006, when Chase
purportedly should have known that BANA failed to discharge its mortgage on the Property. D.
134 at 12. BANA contends that a reasonably prudent plaintiff could have discovered the missing
discharge by seeking evidence of the same or by conducting a title search after the refinance. Id.
at 10. Even if Chase knew or should have known the discharge was missing or not recorded after
it refinanced the Bankarts’ account, there are no facts to suggest it also should have known BANA
failed to block or close the account, see D. 154 ¶ 34; D. 157 ¶ 34, and allowed the Bankarts to
withdraw funds after Chase paid-off the outstanding debt, see D. 154 ¶ 35; D. 157 ¶ 35. Chase
could not have discovered that BANA’s internal missteps caused Chase’s injury until August 29,
2016, i.e., when BANA informed Chase that it did not follow its own policies and, as a result,
could not release the lien on the Property. The Court, therefore, concludes that Chase’s breach of
contract and promissory estoppel counterclaims are not barred by the applicable statute of
limitations.
Accordingly, BANA’s motion for summary judgment, D. 134, is denied.
3.

Chase is Entitled to Summary Judgment as to its Equitable Subrogation
and Declaratory Judgment Counterclaims Against BANA

As to Chase’s motion for summary judgment as to its equitable subrogation and declaratory
relief, D. 135, Chase first argues the BANA Mortgage should be second in priority to Chase’s
mortgage on the Property pursuant to the doctrine of equitable subrogation. The purpose of
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equitable subrogation is to prevent unjust enrichment. Wells Fargo Bank, N.A. v. Comeau, 92
Mass. App. Ct. 462, 468 (2017). Accordingly, “[o]ne who fully performs an obligation of another,
secured by a mortgage, becomes by subrogation the owner of the obligation and the mortgage to
the extent necessary to prevent unjust enrichment.” E. Bos. Sav. Bank v. Ogan, 428 Mass. 327,
330 (1998) (“Ogan”) (quoting Restatement (Third) of Property (Mortgages) § 7.6(a) (1997)). In
other words, a “new mortgage held by a mortgagor, who used the proceeds of the new mortgage
to extinguish an earlier mortgage, may receive the same priority once given to the earlier
mortgage.” Id. To succeed on a claim for equitable subrogation, a party must show that: “(1) the
subrogee made the payment to protect his or her own interest, (2) the subrogee did not act as a
volunteer, (3) the subrogee was not primarily liable for the debt paid, (4) the subrogee paid off the
entire encumbrance, and (5) subrogation would not work any injustice to the rights of the junior
lienholder.” Id. (citation omitted).
There is no colorable dispute that Chase satisfies at least the first four prongs of the
analysis. D. 154 ¶ 28; D. 154-1 at 98 (indicating that WaMu satisfied the Bankarts’ BANA
encumbrance on the same day it executed the promissory note secured by a mortgage on the
Property). BANA, however, argues that Chase was negligent in failing to confirm the status of
the BANA Mortgage. Even if the Court agreed that Chase was negligent—and it does not—courts
in the Commonwealth have recognized that equity may require subrogation even where the junior
lien holder had actual knowledge of the senior lien, see Ogan, 428 Mass. at 331 (explaining that
“knowledge is not necessarily fatal to the grantee’s claim of subrogation, if equity would
nonetheless dictate the recognition of subrogation” (quoting Restatement (Third) of Property
(Mortgages) § 7.6 (1997))), and where the mortgagee’s inability to identify the senior lien was the
result of negligence, see id. (collecting cases). Where, as here, Chase “expected to have first

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priority and paid a price that reflected that expectation” the Court is persuaded that equitable
subrogation and a declaration reflecting Chase’s priority are necessary to prevent unjust
enrichment, id. at 334, particularly where BANA failed to close and block the line of credit and
the Bankarts were able to continue drawing down on the account beginning on February 15, 2006
and thereafter. That is, between the two lenders, Chase has first priority ahead of BANA as to
their respective mortgages on the Property as a matter of equitable subrogation. Chase’s motion
for summary judgment, therefore, is allowed with respect to the equitable subrogation
counterclaim (Count I) and declaratory judgment counterclaim regarding the same (Count II).3
B.

BANA’s Claims Against the Bankarts

That said, the Court still needs to address the rights as between BANA and the Bankarts.
BANA has moved for summary judgment on its claim seeking a declaration of its right to rely on
a copy of the Fleet Line Agreement to foreclose on the Property (in its capacity as junior lien
holder) in lieu of the original document. D. 39. The Bankart Defendants, in turn, moved for
summary judgment on their counterclaim against BANA also seeking clarification regarding

3

In light of this ruling, the Court need not reach Chase’s counterclaim for promissory estoppel or
its defense of unclean hands or address the issue of whether to enforce the Mortgage Discharge
Statute, Mass. Gen. L. c. 183, § 55, against BANA. Compare D. 165 at 1 with D. 166-1 at 2-3.
Additionally, Chase’s motion does not appear to press the breach of contract counterclaim (Count
IV). As to BANA’s assertion of in pari delicto, see D. 144 at 12, the Court agrees with Chase that
BANA waived this affirmative defense by failing to assert it in its original answer, D. 53, and its
amended answer, D. 74; D. 75. Fed. R. Civ. P. 8(c) (providing a non-exhaustive list of “any
avoidance or affirmative defense”); Gray v. Evercore Restructuring LLC et al., 544 F.3d 320, 324
(1st Cir. 2008) (referencing in pari delicto as an affirmative defense); Wolf v. Reliance St. Life
Ins. Co., 71 F.3d 444, 449-50 (1st Cir. 1995) (noting that “[f]ailure to plead an affirmative defense
generally results in waiver of the defense and its exclusion from the case”); Davignon et al. v.
Clemmey et al., 322 F.3d 1, 15 (1st Cir. 2003). Even if it were not waived or had been raised in a
timely enough fashion not to amount to unfair prejudice, Davignon, 32 F. 3d at 15; D. 156 at 4-5,
the doctrine does not apply here where the undisputed facts, as discussed fully above, show
separate acts by BANA and Chase and not joint, wrongful action. See D. 156 at 5-6 (citing
Choquette v. Isacoff, 65 Mass. App. Ct. 1, 3-4 (2005)).
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BANA’s rights and obligations under the Fleet Line Agreement. D. 139. Separately, BANA has
moved for summary judgment on its breach of contract crossclaim against the Bankart Defendants.
D. 133. The Court considers each in turn.
1.

BANA is Entitled to Enforce the Fleet Line Agreement Against the Bankart
Defendants

As an initial matter, the Bankarts challenge the enforceability of the Fleet Line Agreement
because BANA attached a copy of the document (as opposed to the original) when it filed the
amended complaint. D. 139 at 5. The Court understands that BANA located the original Fleet
Line Agreement and invited the Bankart Defendants to inspect it on August 8, 2018. D. 146 at 2;
D. 147-1 at 1-7. During the hearing on January 17, 2019, BANA again offered Bankart Defendants
an opportunity to review the Fleet Line Agreement. Because Bankart Defendants have not
challenged the authenticity of the original Fleet Line Agreement, the Court considers its
authenticity undisputed for the purposes of resolving the instant motions. The Bankart Defendants
next argue that BANA cannot enforce the Agreement because it was signed by the Bankarts in
their individual capacity and not by Barnes in its corporate capacity. As Barnes’ sole managers,
the Bankarts were authorized to enter a mortgage agreement on its behalf. D. 40-2 at 68
(describing the Bankarts’ authority as managers of Barnes pursuant to the entity’s Operating
Agreement). The Court concludes that BANA is entitled to enforce the Fleet Line Agreement
against the Bankart Defendants to the extent such enforcement is consistent with the Court’s ruling
on the priority of the BANA Mortgage. The Court acknowledges the Bankart Defendants’ concern
expressed during the hearing that certain documents attached to BANA’s opposition papers and
purportedly concerning the Fleet Line Agreement were not produced in discovery. See D. 147-1;
D. 147-2. Such documents, however, do not bear on the validity of the fully integrated promissory
note and Fleet Line Agreement nor were they factored into the Court’s consideration of the Bankart
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Defendants’ indebtedness to BANA. Moreover, to the extent Bankart Defendants were seeking to
extend or expand the scope of discovery, it is not clear how the review of additional documents
would change the Court’s analysis of the validity or enforceability of the promissory note and
agreements at issue here. The Court, therefore, denies the request for additional discovery to the
extent pressed by any party here.
2.

BANA is Entitled to Summary Judgment on its Breach of Contract Claim

BANA asserts that summary judgment is appropriate with respect to its breach of contract
claim. To prove a breach of contract claim, a plaintiff must show there was a valid contract, the
defendant breached the contract and that the plaintiff sustained injury as a result of the defendant’s
breach. Linton v. N.Y. Life Ins. & Annuity Corp., 392 F. Supp. 2d 39, 41 (D. Mass. 2005). For
the reasons previously discussed, the Fleet Line Agreement is a valid contract. The undisputed
material facts indicate that the Bankart Defendants breached this agreement when they ceased
making payments in or around 2014, D. 40 at 3; D. 40-2 at 39; D. 152 ¶ 12, and BANA has suffered
over $4 million in damages as a result of that breach. Summary judgment is warranted as to
BANA’s breach of contract claim.
VI.

Conclusion
For the foregoing reasons, the Court DENIES BANA’s motion for summary judgment

against Chase, D. 134, and ALLOWS IN PART and DENIES IN PART as moot Chase’s motion
for summary judgment against BANA, D. 135. The Court denies the Bankart Defendants’ motion,
D. 139, and allows BANA’s motions against them. D. 39; D. 133. In light of the Court’s ruling
on BANA and Chase’s cross-motions, BANA’s motion to strike Chase’s expert affidavit is

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DENIED as moot, D. 159, as the Court did not rely on the affidavit in resolving the pending
motions.
The Court orders the parties to meet and confer in light of this ruling and file a status report
by May 29, 2019 indicating what, if any, further deadlines, proceedings and/or form of judgment
the Court should enter in this matter.
So Ordered.
/s/ Denise J. Casper
United States District Judge

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