Endeavor Capital N., LLC v. Smith
| Decision Date | 15 February 2022 |
| Docket Number | 20-P-1367 |
| Citation | 182 N.E.3d 342 (Table),100 Mass.App.Ct. 1124 |
| Parties | ENDEAVOR CAPITAL NORTH, LLC, & another v. Stuart SMITH. |
| Court | Appeals Court of Massachusetts |
The defendant, Stuart Smith, appeals from a judgment entered in the Land Court in favor of Endeavor Capital North, LLC (Endeavor), and Ricochet Real Estate, LLC (Ricochet), declaring that Endeavor properly conducted a foreclosure under a power of sale, pursuant to G. L. c. 244, § 14, and a foreclosure by entry, pursuant to G. L. c. 244, § 1. We affirm.
Background. We take the facts as found by the judge following the jury-waived trial, supplemented by the undisputed facts in the summary judgment record. See Denver St. LLC v. Saugus, 462 Mass. 651, 653 (2012).
In December 2012, Smith conveyed the property at 23 Londonderry Lane in Middleborough (property) to 23 Londonderry, LLC (23 Londonderry) by quitclaim deed. 23 Londonderry simultaneously granted a mortgage encumbering the property to Endeavor in the amount of $160,000. The mortgage was recorded in the Plymouth County registry of deeds on December 11, 2012. Thereafter, 23 Londonderry granted a second mortgage encumbering the property to Smith in the amount of $42,640, which was also recorded in the Plymouth County registry of deeds on January 3, 2013. A provision in the promissory note secured by the second mortgage permitted Smith to reside on the property until $20,000 of the mortgage principal was paid. At all relevant times, Smith resided in an "in-law" apartment above a garage next to the single-family home (house) on the property.
By April 2013, 23 Londonderry had defaulted on its mortgage payments to Endeavor. Thereafter, Endeavor sought to foreclose on the property and sent Smith notice of a foreclosure sale to the property's address by certified mail, return receipt requested, and regular mail.3 Smith did not receive either of the notices. The envelopes containing each of the notices were ultimately returned to sender as "not deliverable as addressed." The foreclosure sale was scheduled for June 28, 2013, at 1 P.M. , and Endeavor had notice of the sale published in the local newspaper on June 6, June 13, and June 20, 2013.
At 1 P.M. on June 28, Smith was not home; however, several of the occupants of the house and their dog were inside the house at the time. Arriving at approximately 1 P.M. , Kurt Stenhouse, Endeavor's manager, Rosemary Traini, Endeavor's attorney, Paul Fortey, the auctioneer, and two potential bidders entered the property at the foot of the driveway. There, Fortey displayed the advertisement for the auction, planted his auction flag, read the memorandum of sale, and registered the two qualified bidders. He then opened the bidding, and Endeavor successfully bid $132,000 for the property. The auction concluded at 1:10 P.M.
During the auction, the family dog began barking loudly from inside the house, which caused Kerri Crosbie, one of the occupants of the house, to look out the window. She saw at least two cars on the street and went outside with her husband and child to investigate. Stenhouse, Traini, and Fortey walked up to the top of the driveway, where they engaged Crosbie and her husband and discussed the nature of their business there.4
On July 18, 2013, Endeavor recorded a certificate of entry and a foreclosure deed in the Plymouth County registry of deeds. An affidavit of sale was attached to the foreclosure deed reciting the dates that notice of the sale was published in the local newspaper, the date and time of the foreclosure sale, and the successful bidder of the property. The affidavit, however, contained a scrivener's error that stated that the foreclosure sale occurred at 10 A.M. rather than 1 P.M. An affidavit was later recorded correcting the scrivener's error to reflect that the sale in fact occurred at 1 P.M. Following the sale, Endeavor, by deed, conveyed the property to Ricochet, a related entity, and that deed was also recorded on July 18, 2013.
In July 2014, Ricochet sent the occupants of the property a notice to vacate, and all occupants but Smith vacated the property. Ricochet then brought two summary process actions in the Housing Court to evict Smith from the property, but those actions were dismissed on procedural grounds.5 Endeavor and Ricochet then filed this action in the Land Court seeking a declaratory judgment declaring that Endeavor complied with G. L. c. 244, § 14, in providing notice of the foreclosure sale to Smith, and that it properly foreclosed on the property by both entry and power of sale. Endeavor and Ricochet subsequently moved for summary judgment, which Smith opposed, and a Land Court judge concluded that Endeavor's notice of sale complied with the requirements of G. L. c. 244, § 14, despite the fact that Smith did not receive it, and that, because Smith did not challenge the foreclosure by entry within three years of recording of the certificate of entry, his right of redemption had been foreclosed and Endeavor's foreclosure by entry had ripened. The judge determined that there was a disputed issue of material fact whether the foreclosure sale in fact took place as described in the foreclosure affidavit, and a trial was held on that singular issue.6 Following trial, where the judge heard testimony from several witnesses, took evidence, and conducted a view of the property, the judge found that Endeavor properly conducted a foreclosure under a power of sale, pursuant to G. L. c. 244, § 14, and took title of the property by foreclosure deed. Consequently, judgment was entered in favor of the plaintiffs, Endeavor and Ricochet. Smith timely appealed.
Discussion. 1. Summary judgment issues. We review de novo a grant of summary judgment to determine "whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law." Coviello v. Richardson, 76 Mass. App. Ct. 603, 607 (2010), quoting Siebe, Inc. v. Louis M. Gerson Co., 74 Mass. App. Ct. 544, 548 (2009).
a. Notice. Smith argues that the foreclosure of the property is void because he did not receive notice of the foreclosure sale. The claim fails. The statute that governs foreclosure by power of sale does not require proof of receipt. See G. L. c. 244, § 14. "The fourteen-day registered mail notice requirement is satisfied by mailing and nonreceipt is irrelevant." Hull v. Attleboro Sav. Bank, 33 Mass. App. Ct. 18, 25 (1992). Here, it is undisputed that Endeavor sent notice of the foreclosure sale by certified and regular mail to Smith's registered address. Doing so satisfied the notice requirement of G. L. c. 244, § 14, and Smith's nonreceipt of such notice does not void the foreclosure sale. See Hull, supra.
Smith contends that second mortgagees should be entitled to greater notice than mortgagors, and as a result, he should have received actual notice of the foreclosure sale. Smith's problem, however, is that the statute does not make this distinction between notice to mortgagors and notice to second mortgagees,7 see G. L. c. 244, § 14, and "[w]e will not add words to a statute that the Legislature did not put there, either by inadvertent omission or by design." Daveiga v. Boston Pub. Health Comm'n, 449 Mass. 434, 442 (2007), quoting Commonwealth v. McLeod, 437 Mass. 286, 294 (2002).
b. Foreclosure by entry. The statute that governs foreclosure by entry provides:
"A mortgagee may, after breach of condition of a mortgage of land, recover possession of the land mortgaged by an open and peaceable entry thereon, if not opposed by the mortgagor or other person claiming it, or by action under this chapter; and possession so obtained, if continued peaceably for three years from the date of recording of the [certificate of entry], shall forever foreclose the right of redemption."
G. L. c. 244, § 1. Thus, under the statute, a foreclosure by entry is effected "by the mortgagee's peaceable entry, proper filing of a certificate memorializing that entry, and passage of [three years]." Santiago v. Alba Mgt., Inc., 77 Mass. App. Ct. 46, 49-50 (2010). "The three-year holding period begins to run when the mortgagee records a proper memorandum or certificate of entry." Id. at 50. If a person claiming interest in the property "wants to challenge a foreclosure by entry, it is incumbent on him to do so before the three-year period has elapsed." Singh v. 207-211 Main St., LLC, 78 Mass. App. Ct. 901, 902 (2010). If the person claiming interest fails to do so, the right of redemption is "forever foreclose[d]," G. L. c. 244, § 1, and "the former mortgagee owns the legal and equitable interests in the property." Santiago, supra.
As stated supra, the certificate of entry was recorded on July 18, 2013. To be sure, Smith claims that he sufficiently challenged Endeavor's foreclosure by entry within three years of that date by challenging the validity of the foreclosure sale in the prior summary process actions that occurred in 2014 and 2015. In those prior actions, however, Smith did not challenge the foreclosure by entry; he challenged only the validity of the foreclosure sale. Foreclosure by power of sale and foreclosure by entry are two distinct means by which a foreclosure may be accomplished, and they carry their own distinct requirements. See Housman v. LBM Fin., LLC, 80 Mass. App. Ct. 213, 220 (2011). Notably, in the summary process actions, Smith argued that the foreclosure sale was invalid because he did not receive adequate notice of the sale. Even so, the notice that is required by G. L. c. 244, § 14, to conduct a foreclosure under a power of sale is not required to conduct a foreclosure by entry. See Wornat Dev. Corp. v. Vakalis, 403 Mass. 340, 346 (1988) ().
Nothing in Smith's summary process pleadings can be construed as an...
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