Easthampton Sav. Bank v. City of Springfield

• Decision Date: 19 December 2014
• Docket Number: SJC–11612.
• Parties: EASTHAMPTON SAVINGS BANK & others v. CITY OF SPRINGFIELD.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

470 Mass. 284

21 N.E.3d 922

EASTHAMPTON SAVINGS BANK & others¹

v.CITY OF SPRINGFIELD.

SJC–11612.

Supreme Judicial Court of Massachusetts, Suffolk.

Submitted Sept. 4, 2014.

Decided Dec. 19, 2014.

Tani E. Sapirstein, Springfield, for the plaintiffs.

Thomas D. Moore, Associate City Solicitor (Lisa C. deSousa, Associate City Solicitor, with him) for the defendant.

The following submitted briefs for amici curiae:

Lee D. Goldstein, Cambridge, for Harvard Legal Aid Bureau & others.

Robert G. Rowe, III, of the District of Columbia, for American Bankers Association, Inc.

Francis J. Nolan & Nathalie K. Salomon, Newton, for Real Estate Bar Association for Massachusetts, Inc., & another.

Michael McDonagh for Massachusetts Association of Realtors.

Henry C. Luthin, First Assistant Corporation Counsel, & Brandon H. Moss, Quincy, for Massachusetts Municipal Lawyers Association, Inc.

William F. Sheehan, of the District of Columbia, & Brenda R. Sharton, Boston, & Thomas M. Hefferon for Massachusetts Bankers Association, Inc.

Present: GANTS, C.J., SPINA, CORDY, BOTSFORD, DUFFLY, LENK, & HINES, JJ.

Opinion

SPINA, J.

We consider in the present case challenges brought against two ordinances adopted by the city of Springfield (city) in response to a wave of foreclosures triggered by the economic downturn of 2008. The United States Court of Appeals for the First Circuit has certified the following questions to this court, pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981):²

“1. Are Springfield's municipal ordinances Chapter 285, Article II, ‘Vacant or Foreclosing Residential Property’ (the [f]oreclosure [o]rdinance) or Chapter 182, Article I, ‘Mediation of Foreclosures of Owner–Occupied Residential Properties' (the [m]ediation [o]rdinance) preempted, in part or in whole, by those state laws and regulations identified by the plaintiffs?

“2. Does the [f]oreclosure [o]rdinance impose an unlawful tax in violation of the Constitution of the Commonwealth of Massachusetts?”

Easthampton Sav. Bank v. Springfield, 736 F.3d 46, 53 (1st Cir.2013).

We answer the first question that the mediation ordinance is preempted by G.L. c. 244 and that the foreclosure ordinance is preempted by G.L. c. 21E and G.L. c. 111 but not by G.L. c. 244.

We answer the second question in the negative.³

1. Procedural background. We summarize certain undisputed facts in the order of certification and in the record before us. In 2011, in response to an increased number of foreclosures due to the housing market collapse of 2008 and its effect on public safety, the city enacted two ordinances addressing properties left vacant during or after the foreclosure process. The plaintiffs, six banks holding mortgage notes on properties in Springfield, filed suit in State court seeking declaratory and injunctive relief from the enforcement of the ordinances. The defendant city removed the case to Federal court. The Federal District Court allowed the city's motion for summary judgment. The plaintiffs appealed to the United States Court of Appeals for the First Circuit. That court determined that the outcome of the case centered on unresolved questions of Massachusetts law better suited for this Court. We now consider the questions presented to this court.

2. Springfield ordinances. The two ordinances deal specifically with the foreclosure process. The mediation ordinance is entitled “Facilitating Mediation of Mortgage Foreclosures of Owner Occupied Residential Properties” and is codified in Chapter 7.60 of Title 7 of the Revised Ordinances of the city of Springfield, 1986, as amended (city ordinances). The foreclosure ordinance is entitled “Regulating the Maintenance of Vacant and/or Foreclosing Residential Properties and Foreclosures of Owner Occupied Residential Properties,” and is codified in Chapter 7.50 of Title 7 of the city ordinances.

a. Mediation ordinance. The mediation ordinance establishes a program requiring mandatory mediation between mortgagors and mortgagees. The ordinance requires that, upon giving notice of a default and the statutory right of redemption to the mortgagor, mediation must begin within forty-five days. The mediation consists of a conference between the mortgagor and mortgagee in which the parties must make a good faith effort to renegotiate the terms of the mortgage that was the subject of the notice or otherwise

to resolve the pending foreclosure. If, after a mediation conference, the city-provided mediation program manager determines that the mortgagee has made a good faith effort to mediate but that the parties were unable to come to an agreement to avoid foreclosure, the manager will issue a certificate stating that the mortgagee has satisfied the requirements of the mediation ordinance and authorizing the mortgagee to proceed with its rights pursuant to G.L. c. 244. Failure of a mortgagee to comply with the mediation ordinance results in a $300 fine with each day of noncompliance constituting a separate violation.

b. Foreclosure ordinance. The foreclosure ordinance requires owners of buildings that are vacant or undergoing foreclosure to register with the city. The definition of “owner” includes “a mortgagee of any such property who has initiated the foreclosure process.” Under the ordinance, the mortgage foreclosure process is initiated by “taking possession of a residential property pursuant to [G.L. c. 244, § 1 ]; [or by] commencing a foreclosure action on a property in any court of competent jurisdiction, including without limitation, filing a complaint in Land court under the Servicemembers Civil Relief Act—Public Law 108–189 (50 U.S.C.S. App. § 501 –536).” In addition, “where the mortgage authorizes [the] mortgagee entry to make repairs upon the mortgagor's failure to do so,” the mortgagee has “initiated” the foreclosure process. Read together, a mortgagee whose mortgage expressly authorizes entry to make repairs upon the mortgagor's failure to do so is an owner under the ordinance without any consideration as to whether the mortgagor has vacated the property.

Under the foreclosure ordinance, an “owner” as defined in the ordinance is responsible for the maintenance of the property. The ordinance specifies the minimum requirements of maintenance, including the filing of a space utilization plan with the fire commissioner; the removal of hazardous material from the property; the securing of windows and doorways or the provision of twenty-four hour on-site security; the removal of trash, debris, and stagnant water; the draining of water from plumbing if the property is vacant; the procurement of liability insurance for the property; and the provision of a $10,000 cash bond against the possibility of noncompliance. Upon the satisfaction of these conditions, the city will issue a certificate of compliance to the owner.

If an owner fails to register a vacant or foreclosing property with the city and to obtain a certificate of compliance, the building

commissioner, once notified, is empowered to give notice and order the owner to bring the property into compliance with the foreclosure ordinance. Failure to comply with an order to register and its attendant conditions authorizes the building commissioner and his agents to enter the property to inspect it and bring it into compliance with the ordinance. An owner must pay any expenses incurred by the commissioner in securing an unregistered property within seven days of receipt of notice, or the city may file a notice of claim against the property and obtain a lien. The ordinance's requirement of a $10,000 bond ensures that, should the owner of a property subject to the ordinance fail to maintain the property according to the strictures of the ordinance, the city will be able to recoup the costs of entering the property and satisfying the maintenance requirements. If the property is registered and the owner fails to pay the expenses incurred by the city, the city may draw down the posted bond. Furthermore, the city will retain an unspecified portion of the bond as “an administrative fee to fund an account for expenses incurred in inspecting, securing, and marking said building and other such buildings that are not in compliance with [the foreclosure ordinance].”⁴ Finally, failure to comply with the foreclosure ordinance results in a $300 per day fine with each day constituting a separate violation.

3. Preemption. The Home Rule Amendment authorizes a municipality by ordinance or bylaw to “exercise any power or function which the general court has power to confer upon it, which is not inconsistent with the constitution or laws enacted by the general court in conformity with powers reserved to the general court by section eight” of the Home Rule Amendment. See art. 89, § 6, of the Amendments to the Massachusetts Constitution. See also G.L. c. 43B, § 13 (Home Rules Procedures Act). Municipal bylaws are presumed to be valid. Marshfield Family Skateland, Inc. v. Marshfield, 389 Mass. 436, 440, 450 N.E.2d 605 (1983). The plaintiffs argue that the ordinances are inconsistent with several laws enacted by the General Court and thus are unconstitutional. The city argues that no conflict exists with the specified laws and that, should this court conclude otherwise, the foreclosure ordinance by its own language avoids any conflict.

In determining whether a local ordinance or bylaw is inconsistent with a State statute, the “question is not whether the Legislature

intended to grant authority to municipalities to act ..., but rather whether the Legislature intended to deny [a municipality] the right to legislate on the subject [in question].” Wendell v. Attorney Gen., 394 Mass. 518, 524, 476 N.E.2d 585 (1985). Municipalities enjoy “considerable latitude” in this regard. Bloom v. Worcester, 363 Mass. 136, 154, 293 N.E.2d 268 (1973). There must be a “sharp conflict” between the ordinance or bylaw and the statute before a local law is invalidated. Id. Such a conflict “appears when either the legislative intent to...