Barclays Bank PLC v. Poynter

• Citation: 710 F.3d 16
• Decision Date: 13 March 2013
• Docket Number: No. 11–2289.,11–2289.
• Parties: BARCLAYS BANK PLC, Plaintiff, Appellee, v. Thomas A. POYNTER, individually and as Trustee of the Leningrad Cowboys Trust, Defendant, Appellant, Simply Interactive, Inc.; The Transitions Group, Inc.; Transitions Capital, Inc.; Transitions International, Inc.; Transitions Capital Investors, LLC; Transitions Capital Management LLC; Wainwright Bank and Trust Company; Bank of America, N.A.; Fidelity Brokerage Services, LLC; Citibank, NA; Boston Private Bank and Trust Company, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

710 F.3d 16

BARCLAYS BANK PLC, Plaintiff, Appellee,

v.Thomas A. POYNTER, individually and as Trustee of the Leningrad Cowboys Trust, Defendant, Appellant,Simply Interactive, Inc.; The Transitions Group, Inc.; Transitions Capital, Inc.; Transitions International, Inc.; Transitions Capital Investors, LLC; Transitions Capital Management LLC; Wainwright Bank and Trust Company; Bank of America, N.A.; Fidelity Brokerage Services, LLC; Citibank, NA; Boston Private Bank and Trust Company, Defendants.

No. 11–2289.

United States Court of Appeals,First Circuit.

March 13, 2013.

Edmund Polubinski, Jr., with whom Lyne, Woodworth & Evarts LLP was on brief, for appellant.

Michael D. Vhay, with whom Lauren Ann H. Pond and DLA Piper LLP were on brief, for appellee.

Before BOUDIN,^*HAWKINS,^** and THOMPSON, Circuit Judges.

THOMPSON, Circuit Judge.

With the help of a loan from Barclays Bank, PLC (“Barclays”), Dr. Thomas Poynter bought a custom-made yacht. When he stopped making payments on the loan, Barclays repossessed the yacht and sold it. Barclays got less than what Poynter owed and so it sued him for the deficiency. Poynter moved for summary judgment arguing that Barclays was not entitled to collect because it had not provided him with proper notice of the sale. The district court was not convinced; it denied Poynter's motion and sua sponte granted summary judgment in favor of Barclays. Poynter now appeals. Discerning no merit to his argument, we affirm.

BACKGROUND

We state the facts in the light most favorable to Poynter, the party contesting summary judgment, drawing all reasonable inferences in his favor. Pagano v. Frank, 983 F.2d 343, 347 (1st Cir.1993).

In November 2005, Barclays loaned Poynter 1.4 million Euros toward the purchase of a 2005 Oyster 62 Yacht called the Blue Beach. Poynter granted Barclays a first preferred ship mortgage on the vessel (the “mortgage”), which provided that Poynter would pay only interest for the first twenty-four months of the loan and installments of principal plus interest after that. Poynter signed the mortgage in Massachusetts, his place of residence and the location of the yacht.

A few years later, in 2008, Poynter sought to renegotiate the loan terms to allow him to continue paying only interest. Barclays agreed that Poynter could make interest-only payments for September through November of that year but said that was it. But when his first principal/interest payment came due in December, Poynter failed to pay. He was issued a formal notice of default sometime around March of 2009.

Rather than repossess the yacht, Barclays decided to work with Poynter to sell it and, hoping to fetch a good price, they moved the Blue Beach from Boston, Massachusetts to Newport, Rhode Island. But, after several months without a successful sale, Barclays repossessed the yacht. Barclays moved it to Florida and listed it for sale with National Liquidators, a boat liquidation company.

On February 5, 2010, Barclays sent Poynter a “Notice of Our Plan to Sell Property.” Citing provisions of Florida's Uniform Commercial Code (“UCC”) ¹ that relate to a secured party's rights after a debtor's default, the notice stated: “Further to the repossession of your 2005 Oyster 62, Hull ID # OYM0160KL505 in November this year, we herby [sic] provide notice of our intention to sell the vessel pursuant to Florida Statues [sic]: F.S. 679.609; 679.610; 679.612, and 679.613. The vessel ... will be sold by way of private sale sometime after the date of this letter.” The notice did not include a date, time, or place of sale. The notice, which indicated what Poynter still owed in principal and interest, went on to state that any remaining balance was Poynter's responsibility. It also said that Poynter had the right to settle up his debts and if he did, the Blue Beach would be released.

Poynter responded the same day by email to Barclays's Marine Risk and Recoveries Co-ordinator, stating: “thank you for your note.” Just about two months later, on March 31, 2010, Barclays sold the yacht for 986,019 Euros. On April 22, Barclays informed Poynter of the sale and that the residual balance Poynter owed was 683,297 Euros. Poynter ignored Barclays's balance request.

And so, a short time later, Barclays sued Poynter in Massachusetts federal district court.² Barclays filed suit pursuant to the Commercial Instruments and Maritime Liens Act (the “Ship Mortgage Act”), 46 U.S.C. § 31301 et seq., which provides a means for enforcing preferred mortgages in admiralty. Citing Poynter's default, Barclays sought to recover the deficiency. Poynter, after answering the complaint, moved for summary judgment. He claimed that Barclays was barred from recovering the deficiency because, in violation of the mortgage's terms, it did not provide Poynter with proper notice of the sale. Barclays, focusing on a different mortgage provision than Poynter (more on who was relying on what to come), asserted that it did provide proper notice. The district court sided with Barclays. The court denied Poynter's motion and sua sponte granted Barclays summary judgment on the issue of liability. Poynter now appeals the grant of summary judgment.

STANDARD OF REVIEW

We review orders for summary judgment de novo, assessing the record “in the light most favorable to the nonmovant and resolving all reasonable inferences in that party's favor.” Landrau–Romero v. Banco Popular De P.R., 212 F.3d 607, 611 (1st Cir.2000); Houlton Citizens' Coal. v. Town of Houlton, 175 F.3d 178, 184 (1st Cir.1999). A district court may grant summary judgment where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

ANALYSIS

As we alluded to, Poynter and Barclays have different ideas about what kind of notice of sale Barclays was required to give under the mortgage. To remind the reader of the more salient facts: Barclays sold the yacht pursuant to the Florida UCC; the February 5th notice of intent to sell was the only advance notice Poynter received of the sale; this notice did not specify where and when the sale would be; the yacht was sold about two months after the notice issued. We proceed to the arguments.

To support his stance, Poynter relies on Section 4.05 of the mortgage, which provides in pertinent part that in the event of default Barclays may repossess the yacht and then sell it “at any place and at such time as Mortgagee may specify and in such manner as Mortgagee may deem advisable ... after first giving Owner notice thereof ten (10) days in advance of the time and place of sale.” ³ Poynter reads this language to mean that ten days notice as to the time and date of a sale is required in all sales deemed advisable by Barclays including sales conducted under a UCC.⁴ Thus Poynter claims that the February 5th notice of intent to sell, which lacked a time and place, was insufficient. The second half of Poynter's argument is that because the notice was substandard, Barclays should not be allowed to collect the deficiency. For support Poynter relies on what he calls “the analogous area of real estate mortgages,” claiming that Massachusetts law prohibits a real estate mortgagee that does not comply with statutory notice requirements from collecting a deficiency. Poynter thinks this rule should apply to Barclays.

Barclays counters that it was not in fact required to comply with Section 4.05's notice proviso.⁵ Barclays claims that it sold the yacht under Section 4.06 of the mortgage, which provides that Barclays may exercise any “rights, privileges and remedies granted by applicable law”—the applicable law here being the Florida UCC.⁶ Barclays argues that Sections 4.05's notice requirements, according to the mortgage's plain language, do not apply to every sale as Poynter says, including 4.06 sales. Barclays also throws about a few alternative arguments should we disagree about 4.05's applicability, such as: Poynter's actual notice of the sale waives any procedural defaultsand there is no basis for extending Massachusetts statutory real estate law to this case.

In the end, we are tasked with answering one central question: does Section 4.05 impose an umbrella notice requirement on all post-default sale procedures as Poynter argues, or does Section 4.06 provide a stand-alone remedy free of Section 4.05's procedural dictates as Barclays contends? We think, based on the clear language of the mortgage, that Barclays has it right. We explain, starting with some general contract interpretation principles.

To start with, we forgo embarking on a choice of law analysis. Instead we simply elect to interpret the mortgage under Massachusetts law because both parties agree that it applies and because there is at least a reasonable relationship between this dispute and Massachusetts. See Merchants Inc. Co. of N.H., Inc. v. U.S. Fid. & Guar. Co., 143 F.3d 5, 8 (1st Cir.1998) (taking the same approach in a diversity case).

When interpreting a contract, courts must assess whether the contract at issue (here the mortgage) is ambiguous, Bank v. Thermo Elemental Inc., 451 Mass. 638, 888 N.E.2d 897, 907 (2008), a question of law in Massachusetts, Lass v. Bank of Am., N.A., 695 F.3d 129, 134 (1st Cir.2012). To answer the ambiguity question, we examine “the language of the contract by itself, independent of extrinsic evidence concerning the drafting history or intention of the parties.” Bank, 888 N.E.2d at 907. Language is only ambiguous “if it is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one.” Lass, 695 F.3d at 134 (internal quotation marks omitted). Ambiguity, however, is not created just because the parties disagree about the contract's meaning. Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 783 (1st Cir.2011).

Contracts found free from ambiguity are interpreted according to their plain terms; we construe all words according to “their usual...