Lambert v. Fleet Nat. Bank

• Decision Date: 11 May 2007
• Docket Number: No. SJC-09762.,SJC-09762.
• Citation: 449 Mass. 119,865 N.E.2d 1091
• Parties: George LAMBERT v. FLEET NATIONAL BANK.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

865 N.E.2d 1091

449 Mass. 119

George LAMBERT v. FLEET NATIONAL BANK.

No. SJC-09762.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued January 3, 2007.

Decided May 11, 2007.

A. Douglas Matthews for the plaintiff.

Donn A. Randall, Springfield (J. Michael Scully with him) for the defendant.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, & CORDY, JJ.

COWIN, J.

The plaintiff, George Lambert, obtained a five-year, $500,000 commercial mortgage loan from a predecessor of the defendant, Fleet National Bank (now Bank of America).¹ The bank agreed to renegotiate the mortgage loan every five years so long as, among other things, the loan was not in default. Five years later, as contemplated, the bank "rolled over" the mortgage loan into a new five-year note and mortgage. During the next several years, the plaintiff fell behind in the mortgage payments, as well as on taxes and bills on the property. As a result, the defendant declined the plaintiff's requests to roll over the mortgage once again, and ultimately foreclosed on and bought the property. The plaintiff brought suit for breach of contract and violations of G.L. c. 93A, claiming that the defendant had breached an agreement to renew the mortgage, and had misled the plaintiff into believing that it would do so.² A judge in the Superior Court granted summary judgment for the defendant. The Appeals Court affirmed. Lambert v. Fleet Boston Corp., 65 Mass.App.Ct. 1121, 843 N.E.2d 721 (2006). We granted the plaintiff's application for further appellate review, and we affirm the judgment of the Superior Court.

Background. In reviewing a summary judgment decision, we view the material presented in the light most favorable to the nonmoving party, here the plaintiff. Kelley v. Rossi, 395 Mass. 659, 661, 481 N.E.2d 1340 (1985). Viewed in this manner, the evidence in the record is as follows.

a. The 1985 mortgage loan. In 1985, the plaintiff purchased a thirty-two unit rental housing complex in Fall River for $1,000,000. Of the total purchase price, $500,000 was financed by a first mortgage provided by the defendant, with the balance furnished by a second mortgage from the sellers. At the closing, at the plaintiff's request, a bank officer provided a signed letter agreement stating that the bank would renegotiate the mortgage in five years, and in five-year increments thereafter, provided that the loan was not then in default, there was no history of delinquent payments, and the mortgaged property continued to be acceptable collateral.³

b. The 1990 mortgage loan. In the years that followed, the plaintiff experienced cash flow problems; he requested, and the bank provided, a third and a fourth mortgage on the property for $50,000 and $30,000, respectively. In 1990, when the 1985 mortgage note became due, the bank "rolled over" the outstanding balance, as well as the third and fourth mortgages, into a new five-year note for $425,000.

c. The 1991 meeting. In 1991, the plaintiff discovered that his property manager, Robert Levrault, had improperly negotiated approximately $28,000 in checks made out to the plaintiff and taken the funds for his own use. The plaintiff met with a bank loan officer, Donald Isles, and informed him of this situation.⁴ The plaintiff stated that he had been advised to make a demand on the bank for reimbursement of the improperly withdrawn funds, but that he would prefer to recover the money from Levrault himself. The plaintiff indicated that he would "like the bank's cooperation" in seeking legal remedies against Levrault, and that he was short of funds, "so that if [he] went after Mr. Levrault and made no demands of the bank, [he] would expect some cooperation from [the bank] as far as late charges or if [he] slipped behind in the mortgage or other obligations such as the taxes or the water bills." The plaintiff said that he "was expecting a new first mortgage in 1995 and if there were any arrearages, the bank could then roll them into the first mortgage again as they had done previously, or preferably lend me a little more money." The plaintiff asked Isles if, due to his "cash crunch," it would be possible to roll over the mortgage any sooner than 1995.

According to the plaintiff, Isles said "that was perfectly agreeable with the bank," that "[h]e was very glad that I was going to go after the guilty party rather than deep pockets, and he was going to do everything [he] could to cooperate with me." He told the plaintiff, "I'll see to it you don't pay any late charges." Although cautioning the plaintiff that the bank was not "in a position to lend any money," Isles noted that the bank would renew the loan when it "was in a financial position to do so." The plaintiff claims that Isles stated that he would "put a memo" regarding this meeting in the plaintiff's file; however, there is no record of any such memorandum.⁵

From time to time after this meeting, the plaintiff would inquire of Isles whether the bank could roll over his note prior to its expiration, but "the bank never got into that position apparently." Isles did waive late fees on the plaintiff's mortgage payments on several occasions.

d. The 1995 negotiations. In the early 1990's, the plaintiff was unable to pay real estate taxes or water and sewer bills on the mortgaged property, which constituted a default on the mortgage loan. In 1994, the plaintiff met with an officer of the bank to discuss refinancing his mortgage. At this meeting, the bank officer expressed optimism that the bank would renew the plaintiff's mortgage loan, and urged him to cease contact with rival lenders. A similar meeting took place in April, 1995, with a different bank officer. The parties anticipated that any decision by the bank to renew the loan would be expressed in a formal commitment letter. Thereafter, however, the bank notified the plaintiff that it was declining to renew the loan.⁶ The bank foreclosed on the property; an order authorizing the foreclosure entered in January, 1996, and the bank bought the property at the foreclosure sale on or about April 25, 1996.

Discussion. Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Mass. R. Civ. P. 56(c), 365 Mass. 824 (1974). See Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991). "[A] party moving for summary judgment in a case in which the opposing party will have the burden of proof at trial is entitled to summary judgment if he demonstrates . . . that the party opposing the motion has no reasonable expectation of proving an essential element of that party's case." Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716, 575 N.E.2d 734 (1991).

a. Breach of contract claim. The plaintiff's breach of contract claim is based on his 1991 meeting with Isles. He claims that their conversation constituted a binding oral agreement under which the bank, in consideration for the plaintiff's forbearance of any legal claim against the bank for funds misappropriated by Levrault, committed itself to renew the mortgage loan regardless of the plaintiff's default or late payment history. The plaintiff claims that this oral agreement constituted a new, independently binding obligation of the bank to renew the loan. Alternatively, the plaintiff argues that the agreement modified the bank's 1985 letter agreement regarding future renegotiations, essentially waiving two of the bank's conditions to renegotiation: that the loan not be in default, and that there be no history of delinquent payments.

At the outset, we note that to the extent the plaintiff attempts to enforce the 1985 letter agreement, there may be little, if anything, to enforce. The agreement did not obligate the bank to renew the loan, but only to "renegotiate" its terms, provided that certain conditions were met. In any event, we conclude that, however the 1991 meeting is viewed, it was too vague and informal in substance to create any binding legal obligations.

"It is axiomatic that to create an enforceable contract, there must be agreement between the parties on the material terms of that contract, and the parties must have a present intention to be bound by that agreement." Situation Mgt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878, 724 N.E.2d 699 (2000). While it is not necessary that every term of the agreement be specified with precision, "[t]he parties must . . . have progressed beyond the stage of `imperfect negotiation.'" Id., quoting Lafayette Place Assocs. v. Boston Redevelopment Auth., 427 Mass. 509, 517-518 & n. 9, 694 N.E.2d 820 (1998), cert. denied, 525 U.S. 1177, 119 S.Ct. 1112, 143 L.Ed.2d 108 (1999). See Vitale v. Russell, 332 Mass. 523, 525, 126 N.E.2d 122 (1955), quoting Brighton Packing Co. v. Butchers' Slaughtering & Melting Ass'n, 211 Mass. 398, 405, 97 N.E. 780 (1912) ("Expectations and negotiations fall far short of a binding agreement"). Here, the statements in the 1991 conversation that the plaintiff interprets as a binding agreement are precisely the type of "expectations and negotiations" that do not manifest an intent to be bound.

In the course of the 1991 discussion, the plaintiff indicated that he would not seek reimbursement for any misappropriated funds from the bank, but "would expect some cooperation from [the bank] as far as late charges or if [he] slipped behind in the mortgage" (emphasis added). The plaintiff stated that he "was expecting a new first mortgage in 1995" (emphasis added), and made at least two different proposals to the bank: that they roll any arrearages that might arise into a new first mortgage or, alternatively, lend the plaintiff more money to cover his shortfalls. Although Isles supposedly responded that "that was perfectly agreeable with the bank," from the plaintiff's account of the conversation, it is impossible to determine what aspect of the plaintiff's vague and general set of...