Rubygold Main Holdings v. Brian Gardner Carpentry, LLC

• Decision Date: 02 July 2021
• Docket Number: Civil No. 20-cv-1006-JL
• Citation: 2021 DNH 104
• Parties: Rubygold Main Holdings, LLC v. Brian Gardner Carpentry, LLC
• Court: U.S. District Court — District of New Hampshire

2021 DNH 104

Rubygold Main Holdings, LLC v. Brian Gardner Carpentry, LLC

Civil No. 20-cv-1006-JL

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

July 2, 2021

MEMORANDUM ORDER

As with Plaintiff's motion for preliminary injunction, the dispositive motions before the court test the bounds of the Anti-Injunction Act, 28 U.S.C. § 2283. The parties cross move for summary judgment on Count 2 of Plaintiff Rubygold Main Holdings, LLC's complaint, which seeks a declaratory judgment on competing claims of lien priority, quieting title to Rubygold's real property. Rubygold argues that the undisputed facts show that Defendant Gardner's mechanic's lien does not encumber the property because the mortgage by which Rubygold's predecessor took title to the property holds priority over the mechanic's lien, and seeks a declaration stating so. Gardner counters that the Anti-Injunction Act bars the requested declaration, and even if the Act does not bar the relief, Gardner should nonetheless prevail on the merits of the lien priority issue. Gardner also argues that it is entitled to judgment as a matter of law on Rubygold's remaining claims.¹

This court has jurisdiction under 28 U.S.C. § 1332(a) (diversity) because Rubygold is a New York limited liability company and its sole member resides in New York, Gardner is a NewHampshire limited liability company and its sole member resides in New Hampshire, and the amount in controversy exceeds $75,000. After careful review of the parties' submissions and hearing oral argument, the court denies Rubygold's motion and grants Gardner's motion as to Counts 1-3 and 6 of Rubygold's complaint. The threshold, but central, question on Rubygold's declaratory judgment claim is whether the requested declaration would have "essentially the same effect as an injunction." Gloucester Marine Railways Corp. v. Charles Parisi, Inc., 848 F.2d 12, 15 (1st Cir. 1988). Because it would, the Anti-Injunction Act bars the requested relief, and Gardner is entitled to summary judgment on this claim.

As for the remaining claims, Rubygold agrees that its declaratory judgment claim in Count 1 and permanent injunction claim in Count 3 are subject to dismissal as a result of the court's prior orders denying its motion for preliminary injunction.² Gardner's motion for summary judgment is therefore granted as to those claims. In addition, Gardner's motion for summary judgment is granted as to Rubygold's CPA claim because the alleged wrongful conduct does not rise to the level of severity required to establish a claim under the statute. Gardner's motion is denied, however, as to Rubygold's abuse of process and slander of title claims (Counts 4 and 5) because there are genuine disputes of material fact on several elements of each claim.

I. Applicable legal standard

Summary judgment is appropriate where "the movant shows that 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). A dispute is "genuine" if it could reasonably be resolved in either party's favor at trial by a rational fact-finder, and "material" if it could sway the outcome under applicable law. Estrada v. Rhode Island, 594 F.3d 56, 62 (1st Cir. 2010). In analyzing a summary judgment motion, the court "views all facts and draws all reasonable inferences in the light most favorable to the non-moving party." Id.

The parties have effectively cross-moved for summary judgment on Count 2 of Rubygold's complaint; however, "[c]ross motions for summary judgment do not change the standard." Latin Am. Music Co. v. Archdiocese of San Juan of Roman Cath. & Apostolic Church, 499 F.3d 32, 38 (1st Cir. 2007) (citing Specialty Nat'l Ins. Co. v. OneBeacon Ins. Co., 486 F.3d 727, 732 (1st Cir. 2007)).

II. Background

The following background facts - taken mostly from the parties' Joint Statement of Facts, Joint Timeline, and exhibits submitted with their briefing on Rubygold's preliminary injunction request - are relevant to the issues addressed in this motion and are undisputed or accepted, except where noted.

A. The parties and the property at issue

Rubygold is a New York limited liability company with an official address for service of process c/o Castiglia-Rubinstein & Associates, 445 Broadhollow Road, CL-10, Melville, New York 11747.³ Rubygold's sole member is Alexander Rubinstein, who resides in New YorkState.⁴ Rubinstein is also the sole member of Gates Road, NH Centaur Holding, LLC ("Centaur"), a New York limited liability company with the same official address for service of process as Rubygold.⁵ Rubygold owns property known as "5 Gates Road" in Etna, New Hampshire (the "Property").⁶

Gardner is a New Hampshire limited liability company with an address of 186 Etna Road, Etna, New Hampshire 03750.⁷ Gardner's sole member is Brian Gardner, who resides in New Hampshire.⁸

B. Gardner's work on the Property and Mascoma's loan

In 2010, Arrien (a/k/a Adriaan) and Robin Schiltkamp owned the Property. That year, the Schiltkamps hired Gardner to renovate a house on the Property and entered into a Construction Proposal and Contract for the construction project.⁹ Two and a half years into the project, the Schiltkamps financed a portion of the construction with a $2 million loan from Mascoma Savings Bank.¹⁰ To secure the loan, the Schiltkamps granted Mascoma a mortgage onthe Property and recorded the mortgage at the Grafton County Registry of Deeds on November 7, 2012 at Book 3930 Page 0338 (the "Mascoma Mortgage").¹¹

Mascoma disbursed money to Gardner as payment for invoices for its construction work on the project, and received mortgagor affidavits, as reflected in the following chart:¹²

Gardner

Invoice #

Invoice

Date

Lien

Waiver

Mortgagor

Affidavit

Mascoma

Payment

Check

Date

5/2148

2/6/2013

No

2/6/2013

$301,634.53

2/8/2013

5/2158

3/28/2013

No

3/29/2013

$459,060.27

4/1/2013

5/2167

5/17/2013

No

5/18/2013

$405,173.46

5/20/2013

540782-06

7/15/2013

No

7/18/2013

$300,000.00

7/19/2013

Total:

$1,465,868.26

Accordingly, out of the $2,000,000 loan, Mascoma disbursed $1,465,868.26 to Gardner for its construction work on the Property.¹³

After July 2013, the Schiltkamps entered into other agreements with Gardner for additional construction work on the Property, with the same time and material terms as agreed to in the April 2010 contract.¹⁴ Using funding sources other than the Mascoma loan, the Schiltkamps paid all invoices from Gardner for work performed between late-July 2013 and April 2014, and as of April 5, 2014 the Schiltkamps had a $17,211.91 credit with Gardner for the project.¹⁵

Gardner performed additional work on the Property between April 2014 and June 2015 and invoiced the Schiltkamps for this work as follows:¹⁶

04/30/14

Inv #05/2234,

$219,693.48

05/31/14

Inv #05/2246,

$114,189.40

12/29/14

Inv #05/2328,

$111,081.68

06/09/15

Inv #05/2329,

$27,724.20

Total:

$472,688.76

The Schiltkamps partially paid these four invoices and applied their $17,211.91 credit, leaving a balance due of $245,476.85. Gardner acquired a mechanic's lien for this unpaid work.¹⁷

C. Gardner's suit to perfect its mechanic's lien and the 2015 recorded letter

In June of 2015, Gardner sued the Schiltkamps in Grafton County Superior Court to collect the unpaid balance due for the construction project and perfect its mechanic's lien.¹⁸ Gardner obtained a writ of attachment to perfect its mechanic's lien¹⁹ in the amount of$245,476.85 and recorded the writ on or about July 9, 2015 at Book 4142, Page 0959 of the Grafton County Registry of Deeds.²⁰

Several months after obtaining its writ of attachment, on November 13, 2015 Gardner recorded a letter from its counsel to Mascoma's counsel (the "2015 Letter") in the Grafton County Registry of Deeds.²¹ The 2015 Letter appears to be Gardner's response to an e-mail from Mascoma's counsel setting forth Gardner's legal position that its mechanic's lien held priority over Mascoma's mortgage. The letter stated, in part, that:

So that prospective purchasers are not misled, we urge you to make clear to all bidders that the successful bidder will take the property subject to [Gardner's] secured mechanics lien and attachment of $245,476.85. We will also be recording a copy of this letter in the Grafton County Registry of Deeds.²² (emphasis and alteration in original)

On October 19, 2016, Judge MacLeod of the Grafton County Superior Court issued an order in the state court case entering default judgment for Gardner in the amount of $382,848.54 plus costs and interest.²³ The order noted that a "taxation of costs will be issued by the clerk once this order becomes final."²⁴

D. The Schiltkamp bankruptcy and Mascoma's relief from stay

On October 31, 2016, less than 30 days after the state court's default judgment order, the Schiltkamps filed a Chapter 11 Petition in the United States Bankruptcy Court for the Southern District of New York, which later converted to a Chapter 7 liquidation proceeding.²⁵ Mascoma moved for relief from the automatic stay in order to pursue a foreclosure sale of the Property.²⁶ In August 2017, the Bankruptcy Court endorsed a stipulated order terminating the automatic stay as to Mascoma.²⁷ The order provided in part that the "automatic stay of Bankruptcy Code § 362(a) shall be terminated as against Mascoma with respect to the Etna Property to permit Mascoma, its successors and assigns, to foreclose the Mortgage or otherwise avail itself of its available state law rights and remedies with respect to the Mortgage and Etna Property."²⁸

E. The 2017 recorded letter

On October 4, 2017, just days before the scheduled foreclosure sale of the Property, Gardner recorded a second letter (the "2017 Letter") with the Grafton County Registry of Deeds, in response to another e-mail from Mascoma's counsel.²⁹ The 2017 Letter maintained Gardner's position that its mechanic's lien had priority over Mascoma's mortgage, but referenced and attached Gardner's filings in the...