Turner v. Shared Towers VA, LLC

• Decision Date: 19 December 2014
• Docket Number: No. 2013–612,2013–612
• Citation: 167 N.H. 196,107 A.3d 1236
• Parties: Joseph W. TURNER, Individually & a. v. SHARED TOWERS VA, LLC & a.
• Court: New Hampshire Supreme Court

167 N.H. 196

107 A.3d 1236

Joseph W. TURNER, Individually & a.

v.SHARED TOWERS VA, LLC & a.

No. 2013–612

Supreme Court of New Hampshire.

Argued: November 12, 2014

Opinion Issued: December 19, 2014

Cook, Little, Rosenblatt & Manson, p.l.l.c., of Manchester (Arnold Rosenblatt and Kathleen M. Mahan on the brief, and Ms. Mahan orally), for the petitioner.

Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester (Christopher G. Aslin and Gregory E. Michael on the brief, and Mr. Michael orally), for the respondents.

DALIANIS, C.J.

The respondents, Shared Towers VA, LLC (Shared Towers) and NH Note Investment, LLC (NH Note), have appealed, and the petitioner, Joseph W. Turner, individually and as trustee of the Routes 3 and 25 Nominee Trust, has cross-appealed, orders of the Superior Court (O'Neill, J.) following a bench trial on the petitioner's petition for a preliminary injunction enjoining a foreclosure sale and for damages and reasonable attorney's fees. The parties' dispute centers around a commercial construction loan agreement and promissory note secured by a mortgage, pursuant to which the petitioner was loaned $450,000 at 13% interest per annum to build a home. The respondents argue that the trial court erred when it: (1) determined that they would be unjustly enriched if the court required the petitioner to pay the amounts he owed under the note from November 2009 until April 2011; (2) applied the petitioner's $450,000 lump sum payment to principal; (3) excluded evidence of the petitioner's experience with similar loans; (4) ruled that, because the promissory note failed to contain a "clear statement in writing" of the charges owed, as required by RSA 399–B:2 (2006), the respondents could not collect a $22,500 delinquency charge on the petitioner's lump sum payment of principal; and (5) denied the respondents' request for attorney's fees and costs. The petitioner contends that the trial court erroneously concluded that the respondents' actions did not violate the Consumer Protection Act (CPA). See RSA ch. 358–A (2009 & Supp.2013). We affirm in part, reverse in part, vacate in part, and remand.

I. Facts

The trial court found, or the record establishes, the following facts. The petitioner owns property on Marks Island in Gilford and, in 2009, sought financing to construct a home on one of his lots. Because the home was to be constructed on an island, he was unable to obtain a construction loan with conventional financing. Financial Resources Mortgage, Inc. (FRM) procured a construction loan for the petitioner from Mark Butler, a private lender. On April 9, 2009, the petitioner and Butler executed: (1) a commercial construction loan agreement; (2) a promissory note; (3) a mortgage security agreement and assignment; and (4) a collateral assignment of rents and leases. Under the loan agreement, Butler agreed to loan the petitioner $450,000 as "a bridge loan to facilitate the completion of construction" of the home. The agreement required the petitioner to "pay [Butler] in monthly installments on interest only on the total amount of funds loaned." The loan was secured by the mortgage and the collateral assignment of rents and leases. The promissory note required the petitioner to repay the loan in full, with 13% interest, in one year. The note obligated him to pay Butler "interest only in Twelve (12) consecutive monthly payments of $4,875.00 each." The first payment was due on June 1, 2009. The final payment, consisting of all principal, accrued interest, and charges, was due May 1, 2010. The note provided that if the petitioner defaulted on the payment of interest and principal due under the note, and failed to cure the default within a specified period of time, "the entire unpaid balance of principal and interest shall, at the option of the Holder, become due and payable at once without demand or notice."

The mortgage and note associated with the loan were assigned three times. They were first assigned in May 2009 by Butler to Dodge Financial, Inc., the then-trustee of BD 2009 Realty Trust. In November 2009, Kamal Doshi, another trustee of BD 2009 Realty Trust, assigned the mortgage and note to Shared Towers. Finally, in June 2011, Shared Towers assigned the mortgage and note to NH Note.

From April to October 2009, the petitioner made payments consistent with the terms of the loan agreement and note. He stopped making payments in November 2009. In December 2009, the petitioner received a letter from the trustee appointed in the involuntary bankruptcy of FRM, which stated, in pertinent part:

We understand that you may have borrowed money from FRM ... or an entity or individual affiliated or related to [FRM]. If you make or are obligated to make monthly payments to any such entity or individual, you are hereby directed to make all such future payments directly to [the bankruptcy trustee].

Please note that any payments made directly [to] any other entity or individual, will NOT count as a credit to your underlying obligations. All such payments must be made to this office in order for you to receive appropriate credit. You will NOT receive credit for any payments even if a new Trustee has purportedly been appointed for any Trust that may hold the mortgage on your property.

A few weeks later, the petitioner received another letter from the trustee enclosing a bankruptcy court order. This letter stated, in pertinent part: "If you have borrowed money from FRM ... or from any trust or entity affiliated or related to FRM ..., the Order requires that you make all monthly payments, all payments of principal, and all principal payoffs to" the bankruptcy trustee. However, having also received demands from Butler and Doshi, the petitioner did not make any payments.

In April 2011, a settlement was reached among Butler, Doshi, Shared Towers, and the bankruptcy trustee (who was also the bankruptcy trustee for Dodge Financial, Inc. and BD 2009 Realty Trust), pursuant to which, Doshi, on behalf of Shared Towers and NH Note, took ownership of the petitioner's loan, mortgage, and promissory note.

On April 27, 2011, Shared Towers notified the petitioner that it was now the holder of the loan and the debt and that the petitioner was in default of his obligations thereunder. Shared Towers informed the petitioner that the note had matured on May 1, 2010, and that pursuant to the note, he owed: (1) $450,000 in principal; (2) $92,625 in interest; and (3) $24,206.25 in delinquency charges, which included a $22,500 charge for late payment of the lump sum principal amount. Shared Towers notified the petitioner that if he failed to pay those amounts on or before May 1, 2011, Shared Towers would "pursue all of its rights and remedies" under the loan documents, including, but not limited to, commencing foreclosure proceedings under the mortgage. To defer the foreclosure sale, the petitioner paid Shared Towers $15,000. The petitioner instituted the instant action in July 2011.

In July 2011, the trial court held a hearing on offers of proof on the petitioner's request for a preliminary injunction to enjoin the foreclosure sale. At the hearing, the petitioner "conceded that the principal amount ... which [he] legitimately owe[s] is $450,000.00." However, he disputed "interest charges, late fees and attorney fees which have added approximately $100,000 to the debt." The trial court ordered the petitioner to pay the $450,000 and ordered the respondents not to foreclose on the property until further court order. In response to the respondents' motion for clarification and/or reconsideration, the trial court clarified that the $450,000 payment "shall be applied only as determined at the final hearing in this matter." Thereafter, in addition to remitting the $450,000 principal to the respondents, the petitioner paid $34,125 in interest payments from an escrow account.

The trial court conducted a bench trial on the petitioner's remaining claims for relief. The court first decided that the respondents were not entitled to a delinquency charge on the petitioner's late payment of principal because the promissory note failed to contain a "clear statement in writing" that the charge would so apply. RSA 399–B:2. The trial court next concluded that the respondents were not entitled to any payments from November 2009 until April 2011 because, during that time, ownership of the loan and note, was "in flux." The court determined that because of that fact, "[i]nterest payments, principal payments, and associated penalties ... should have been tolled from November 2009 through April 2011," and that, if the petitioner were now ordered to pay the respondents the payments that were due from November 2009 through April 2011, the respondents would be unjustly enriched. The court further found that the $450,000 that the petitioner remitted to the respondents pursuant to the preliminary injunction order "satisfied the principal amount owed." With regard to the petitioner's damages claim, the trial court determined that the respondents did not violate the CPA.

The trial court ordered the parties to "provide ... their respective computations of total amounts paid to date and outstanding amounts due consistent with the [court's] findings." The respondents argued that the petitioner owed four months of interest payments and the corresponding 5% penalty on each such payment, for a total of $19,500 in interest payments and $975 in penalty payments. They also argued that they were entitled to $77,836 in defense costs, including legal fees. The petitioner conceded that he owed three months of interest payments and two 5% penalty payments, for a total of $14,625 in interest payments and $487.50 in penalties. The petitioner argued that, after subtracting the $15,000 he paid to defer the foreclosure, he owed the respondents a total of $112.50. Based upon the parties' computations, the trial court determined that the petitioner owed interest and a 5% penalty for a portion of April 2011, and...