DeSimone v. MacQuinn-Tweedie, HAN CV-99-38

• Decision Date: 16 March 2003
• Docket Number: HAN CV-99-38
• Citation: DeSimone v. MacQuinn-Tweedie, HAN CV-99-38 (Me. Super. Mar 16, 2003)
• Parties: Robert DeSimone et al., Plaintiffs/Counterclaim Defendants v. Lisa MacQuinn-Tweedie et al., Defendants/Counterclaim Plaintiffs/ Third-Party Plaintiffs v. David Witham, Third-Party Defendant
• Court: Maine Superior Court

Robert DeSimone et al., Plaintiffs/CounterclaimDefendants v. Lisa MacQuinn-Tweedie et al., Defendants/CounterclaimPlaintiffs/ Third-Party Plaintiffs v. David Witham, Third-Party Defendant

No. HAN CV-99-38

Superior Court of Maine, Hancock.

March 16, 2003

SUPERIOR COURT CIVIL ACTION

Decision and Judgment

A trial on all claims that remain pending in this action was held on August 14, 15, 16 and September 2, 2002.On each hearing date, all parties and counsel of record were present.Following the presentation of evidence, the parties submitted written argument, which the court has reviewed and considered.

A.Procedural background

This action was commenced in May 1999 when the plaintiffs filed a two-count complaint.Both claims relate to the disposition of a Bar Harbor motel and the 8 acre parcel of real estate on which the motel is located.In count 1, the plaintiffs sought a declaration of the parties' rights and liabilities based on allegations that, under an instrument dated March 2 1999 and entitled "Agreement for Lease of Park Entrance

Motel and Purchase of 3.01 Acre Pt. Parcel," they were contractually entitled to exercise an option and purchase a portion of the realty (the 3 acre parcel described as the "point parcel").They further alleged that pursuant to the agreement they had a leasehold interest in the hotel and the 5 acres, which adjoins the point parcel, on which the motel is located.The plaintiffs also sought to enforce an arbitration provision in the agreement that they claimed was triggered by the parties' dispute regarding the property (count 2).In their responsive pleadings, the defendants contested the plaintiffs' claims for relief.Additionally, the defendants filed a counterclaim that included claims for a declaration that the March 2 agreement was invalid and unenforceable (count 1) and for money damages based on claims of slander of title (count 2) and interference with an advantageous contractual relationship (count 3).^[1] These claims are based on allegations that the plaintiffs filed a lis pendens with the Hancock County Registry of Deeds, providing record notice of the parties' dispute regarding the fate of the real estate.The defendants also initiated a third-party claim against David Witham, whom the defendants alleged was a partner of the plaintiffs in the relevant transactions.The defendants' claims against Witham, brought against him in his capacity as a partner of the plaintiffs, were identical in substance and structure to those set out against the plaintiffs in the counterclaim.

In their pleading that was responsive to the counterclaim, the plaintiffs and the third-party defendant asserted a variety of claims against Peter Roy, Esq. and his law firm.^[2] The claims consisted of defamation abuse of process, intentional and negligent infliction of emotional distress, and tortious interference with contractual relationship.Roy and the law firm moved to dismiss all counts asserted against them.Pursuant to 14 M.R.S.A. § 556 and common law principles, that motion was granted, all of those claims were dismissed, and the plaintiffs and Witham were ordered to pay attorney's fees of $20,000.^[3] Attempts by the plaintiff and Witham to amend the pleadings filed against Roy and his law firm were unsuccessful, and thus Roy and his firm are no longer parties to this action.^[4]

While this case has been pending, a foreclosure action involving the 8 acre motel property was pending and adjudicated in the District Court.The court entered a judgment of foreclosure in favor of the mortgagee, Union Trust, and in March 2001 the Law Court affirmed that judgment.SeeUnion Trust v MacQuinn-Tweedie,2001 ME 43, 767 A.2d 289.In that judgment, the District Court ordered a sale of the mortgaged premises.The plaintiffs at bar had participated in that proceeding as parties in interest.In light of the resolution of that related action, in this casethe defendants moved to dismiss the plaintiffs' claims against them.The court granted that motion because any interest that the plaintiffs may have had in the property was extinguished by the foreclosure sale.As is noted in the court's order, the plaintiffs did not challenge the defendants' contention that the declaration they sought in their complaint was no longer possible and that consequently there was no reason to proceed to arbitration to address the dispute arising from the March 2 agreement.The court further rejected the plaintiffs' attempts to cast their action as one for breach of that contract.This resulted in a dismissal of all of the plaintiffs' claims against the defendants.As result of this^[5] and prior orders entered in this case the sole unadjudicated claims are the defendants' claims against the plaintiffs and Witham for slander of title and interference with contractual relations, and those claims were the subject of the trial noted above.

B.Findings of fact

The focus of this litigation is the Park Entrance Motel and the 8 acre parcel of real estate associated with it.DefendantLisa Tweedie received a partial interest in that asset from one or both of her parents.In 1988, the plaintiffs, who were active in the local community as, among other things, commercial real estate brokers, obtained an ownership interest in the motel, acquiring that interest from a member of Lisa's family.The plaintiffs held that interest through several corporations in which they were principals.During the following few years, the plaintiffs and Lisa alternated management responsibility on an annual basis.In 1993, the then-mortgagee bank, Key Bank of Maine, commenced a foreclosure action involving the motel property, and that action was resolved by agreement three years later.That agreement was memorialized in two instruments, the second of which was a revision of the first.Defendants' exhibits 2, 3.^[6] In one of its effects, that agreement restructured the business relationship between, on the one hand, Lisa and her husband, defendantJames Tweedie,^[7] and, on the other hand, the plaintiffs.Among other things, the plaintiffs divested themselves of any interest in the motel business and in most of the tangible and intangible property associated with it.^[8] Further, Lisa granted to the plaintiffs an option to purchase a portion of the 8 acre parcel of realty on which the motel was situated.Defendant's exhibit 3, ¶ 4.The option property, which is the "point parcel," is 3 acres in size.In the original agreement, the parties noted that a survey was underway to define the boundaries of the new lot.Defendants' exhibit 2, ¶ 4.Two months later, the plaintiffs recorded a memorandum of this option in the Hancock County Registry of Deeds.Defendant's exhibit 5.That filing included the boundary description for the point parcel.Id.

The 1996 agreement included a provision for mandatory arbitration in the event of a dispute:

The parties each agree that in the event of a dispute as between them relating to the substance of this Agreement, or with respect to matters described herein, or subject hereto, that such disputes shall be resolved by binding arbitration in accordance with the applicable provisions of the Maine Uniform Arbitration Act, 14 M.R.S.A.Statute 5927 et. seq. as the same may be amended.

Defendants' exhibit 3, ¶ 17.

In order to accomplish the financial provisions of the 1996 agreement, the Tweedies and New Park Entrance Motel (a corporate entity) secured mortgage loan proceeds from Union Trust Bank.The amount borrowed was well in excess of $2 million.The mortgage issued to Union Trust securing that loan extended to the entire 8 acre parcel, which included the point parcel.Under the terms of the 1996 agreement, the terms of the plaintiffs' option obligated the Tweedies to satisfy the conditions of the mortgage, with the ultimate goal of permitting Union Trust to release the portion of the secured premises that constituted the point parcel.Defendants' exhibit 7.The plaintiffs then would be in a position to exercise their option, which required payment of roughly $260,000 to the Tweedies.Id.The parties' agreement included provisions that would be activated if the Tweedies defaulted on their mortgage obligation to Union Trust and provided some level of protection to the plaintiffs, because such a default would compromise the plaintiffs' rights under the option.^[9]Defendants' exhibit 4, ¶ 7.Indeed, although the parties plainly envisioned a partition of the 8 acre parcel as part of the future transaction triggered by the plaintiffs' exercise of their option, in fact that partition was never effected, and the 8 acres has always taken the form of a single parcel - even when it was conveyed as a result of the foreclosure sale.

Toward the beginning of 1998, the Tweedies and the motel fell into default on the mortgage with Union Trust.The Tweedies and the motel, as mortgagors, acknowledged the number and nature of the defaults in a written agreement with Union Trust under which the mortgagee agreed to forebear from pursuing its rights.Seeplaintiffs' exhibit 4.The defaults evidence financial problems with the operation of the motel; those defaults included excessive indebtedness, insufficient operating funds for the business, unpaid taxes and unauthorized disposition of the loan proceeds.Id.,¶ 1.More as a mechanism to protect its security that as evidence of the motel's success,^[10] the bank loaned the mortgagors an additional $277,000, which was specifically earmarked for renovations "to make the motel property more attractive and competitive and enhance the value of the Bank's collateral."Id.,¶ 2.

One of the protections that the plaintiffs secured in the 1996 agreement was the right to be notified if the Tweedies defaulted...