Hogan v. Riemer

Decision Date24 September 1993
Docket NumberNo. 92-P-291,92-P-291
PartiesPauline A. HOGAN v. Robert L. RIEMER. 1
CourtAppeals Court of Massachusetts

Christopher L. Maclachlan, Boston, for plaintiff.

Lawrence J. Crowley, Jr., Isaac H. Peres, Boston, with him, for defendant.

Before BROWN, KASS and LAURENCE, JJ.

KASS, Justice.

Pauline Hogan made an imprudent second mortgage loan which, in fairly short time, caused her to lose her house. She brought an action against the lender, Robert L. Riemer, doing business as Pickwick Financial Associates ("Pickwick"), seeking varieties of relief. The common premise of all her claims of relief was that Pickwick had initially offered more favorable loan terms than the loan documents signed by Hogan contained, and that Pickwick's representative had said at the loan closing that Pickwick did not want her house and would "work with" Hogan were she to get into financial difficulty.

On appeal, the sole issue Hogan urges is that the materials submitted by the parties in support of and opposition to a defense motion for summary judgment disclosed differences about material facts bearing on whether Pickwick had acted unfairly and deceptively within the meaning of G.L. c. 93A, §§ 2 and 9. The nature of the unfair and deceptive conduct, as indicated above was that Pickwith had lured Hogan into a loan more onerous than initially described to her and had said it would "work with her" if she ran into financial difficulties. A judge of the Superior Court awarded summary judgment to the defendant Pickwick. We affirm.

Undisputed facts. From the affidavits, a deposition, and documentary evidence served up to the Superior Court judge for his consideration on a defense motion for summary judgment, material undisputed facts emerged as follows. Hogan was in the process of divorce from her husband. She desired to buy his interest in the marital residence at 79 Claflin Street, Belmont. By the terms of a separation agreement (found fair and reasonable by a judge of the Probate Court and incorporated in the judgment nisi), Hogan was to acquire her husband's interest in the marital residence for $125,000, of which $85,000 was to be paid in exchange for his deed by January 31, 1988, the remaining $40,000 at such time as she sold the property. With the purpose of raising cash to conclude the buy-out of her husband and to pay other debts, Hogan applied to Pickwick for a loan. At the time she applied for the loan, Pickwick was aware that her average monthly income was $2,000. On January 15, 1988, she closed a loan with Pickwick for $138,000, secured by a second mortgage on the 79 Claflin Street property. Following the recording of title and loan documents, Pickwick disbursed $85,000 to the husband's counsel, $35,590 to the borrower, $8,000 to an interest reserve fund (at Hogan's request that amount had been reduced from $10,000 and the net loan proceeds to Hogan had been increased by $2,000), and the balance to various fees and costs such as a mortgage broker's commission, an origination fee, legal fees, and a title insurance premium. A consumer disclosure statement set out the annual percentage interest, finance charge expressed in dollars, the amount financed and the total payments which would be made over the two year period of the loan.

The disclosure statement also set forth the estimated monthly amount due on the loan, viz., $2,157.05. Prior to the making of the loan, Hogan had visited at Pickwick's place of business and had discussed loan terms with a loan officer. Hogan said that temporary financial embarrassment prevented her from paying debt service at once and asked for a six-month cushion until her business (a florist shop at the Eastern Airlines terminal at Logan airport) cash flow improved. The lesser cushion for interest payments (five months) was a change in loan terms which Hogan requested at the closing. Hogan at closing received from Pickwick a notice that she was entitled to rescind the loan within three days. Throughout the closing, Hogan was accompanied by the lawyer who was representing her in connection with her divorce.

Pickwick, in May, 1988, sent a notice (with the heading, "A Friendly Reminder ...") to Hogan that on June 1, 1988, her first payment, in an estimated amount of $1,790, 2 would be due on her loan. Hogan had suffered business setbacks, was unable to make any loan payment, and, thus, defaulted on the note to Pickwick. On June 17, 1988, Pickwick, with an unfriendly reminder, declared the entire note due and payable and announced it was commencing foreclosure proceedings. A judgment having the effect, among others, of authorizing a foreclosure sale was entered in the Land Court on October 26, 1988. 3

Disputed facts. (i) Loan amount. An affidavit by Hogan said that when she first made contact with Pickwick, its representative said it would be willing to lend "as much as $150,000, to be repaid with monthly payments not to exceed $1,200." Pickwick's affidavit said their preliminary conversation was about a loan of approximately $110,000, with net proceeds of $100,000, and that Hogan later had requested the larger loan. (ii) Term of loan. Pickwick said that it offered Hogan a choice of a long-term or short-term loan and that she opted for the latter. Hogan denied having requested a short-term loan (which is what she got) and said that she asked for a long-term loan. (iii) Interest rate. There is disagreement whether she was apprised of the interest rate. (iv) Monthly payments. Hogan said she was initially told monthly payments would be between $1,000 and $1,500 per month. In another affidavit Hogan asserted that she was assured monthly payments would not exceed $1,200. Pickwick said it had informed her of an estimated monthly payment of $1,695 on a proposed $110,000 loan. (v) What Hogan knew before closing. Hogan said she did not know what the loan amount was until she arrived at the closing. (vi) Promise not to foreclose. Hogan said Pickwick reassured her "that everything would be alright, that if I had payment problems, that they would work with me" and "would not take my house." Her lawyer testified in deposition that he recalled no more than "a promise to at least try to resolve difficulties down the road, a promise of a future course of dealings," which he regarded at the time as passing conversation while papers were reviewed and to which he attributed no particular significance. (vii) Review of closing documents. Pickwick claims its loan officer at the closing reviewed with Hogan each provision of the closing documents paragraph by paragraph. In his deposition, Hogan's lawyer testified that the loan papers were carefully reviewed at closing. Hogan asserts that Pickwick's representative did not review the loan documents with her, that she "never reviewed all the documents and terms of the loan prior to signing them," and says that, "It was only after I had signed the documents that I realized the terms of the loan were different from what had been originally promised to me."

For purposes of judging whether summary judgment ought to have been granted, the existence of disputed facts is consequential only if those facts have a material bearing on disposition of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 2509-2510, 91 L.Ed.2d 202 (1986). Norwood v. Adams-Russell Co., 401 Mass. 677, 683, 519 N.E.2d 253 (1988). Beatty v. NP Corp., 31 Mass.App.Ct. 606, 607, 581 N.E.2d 1311 (1991). The substantive law will identify whether a fact, in the context of the case, is material. Beatty v. NP Corp., supra at 608, 581 N.E.2d 1311. See also Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711, 575 N.E.2d 734 (1991).

Assuming, for purposes of analysis, that the parties, in earlier conversations, discussed loan terms at variance with those later reflected in the loan papers, the detailed and integrated legal documents executed by Hogan with her lawyer at her side would, in the absence of fraud, supersede earlier conversation. Were it otherwise, there would not be much point in drawing and executing integrated documents. Cf. McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass. 704, 710-711, 563 N.E.2d 188 (1990); Cambridgeport Sav. Bank v. Boersner, 413 Mass. 432, 441-442, 597 N.E.2d 1017 (1992). See Turner v. Johnson & Johnson, 809 F.2d 90, 96 (1st Cir.1986). To a major extent, that is what the parol evidence rule is about. See Glackin v. Bennett, 226 Mass. 316, 319-320, 115 N.E. 490 (1917); Sherman v. Koufman, 349 Mass. 606, 610, 211 N.E.2d 220 (1965); Bendetson v. Coolidge, 7 Mass.App.Ct. 798, 802-803, 390 N.E.2d 1124 (1979). See also Amerada Hess Corp. v. Garabedian, 416 Mass. 149, 155, 617 N.E.2d 630 (1993).

The integrated documents barrier may be penetrated by evidence tending to show that the documents are not, in fact, complete, Ryder v. Williams, 29 Mass.App.Ct. 146, 149-150, 558 N.E.2d 1134 (1990), or that the execution and delivery of the documents were induced by fraud. Bates v. Southgate, 308 Mass. 170, 182, 31 N.E.2d 551 (1941). McEvoy Travel Bureau, Inc., v. Norton Co., 408 Mass. at 711 n. 5, 563 N.E.2d 188. Hogan's affidavits do not suggest incompleteness of the loan documents. Nor do those affidavits suggest fraud in the sense that the content of the documents or their significance at the time of closing was misrepresented. Read favorably to Hogan, as is appropriate in the case of the party resisting summary judgment, she signed the documents as they were because of the pressure imposed by her divorce settlement to obtain the loan funds. Nothing appears in her statements, however, which reflects that at the loan closing (or at any time thereafter, prior to her default) Hogan remonstrated about the loan terms or even mentioned they were at variance with what she had expected. There are absent the essential elements of misrepresentation of a material fact, made to induce...

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