Vasapolli v. Rostoff

• Decision Date: 31 August 1993
• Docket Number: Civ. A. No. 92-11501-K.
• Citation: 864 F. Supp. 215
• Parties: John VASAPOLLI, Richard Solomon, Edward S. Ferguson, Sally E. Ferguson, George Hamilton, Charlotte Miller, Aaron Miller, Michael Miranda, Jr., Douglas Bassett, Kurt A. Lunden, Richard L. Dussault, Mary R. Dussault, David Stern, Anthony T. Zambuto, Debra J. Zambuto, Michael Tomsho, Ann Tomsho, Donald Booth, Erna Hooten, Daniel Issenberg, Herbert Bello, and Deanna Bello, Plaintiffs, v. Stephen M. ROSTOFF, David Rostoff, James I. Harris, Patriot Real Estate Development Corporation, Harvey Gertel, STE Development Corporation, Canterbury Village, Inc., as General Partner of Canterbury Village Limited Partnership, Peter Hicks, Trustee d/b/a Leslie F. MacNeil, Jr. Associates, The 36-40 Cohasset Avenue Associates, The 54-58 River Street Associates, Regency Arms Development Corporation, Woodland Hills General Partnership, The 32 Dean Avenue Associates, Paul Revere Development Corporation, Stephen M. Rostoff d/b/a Brookhaven Funding Company, Stephen M. Rostoff d/b/a Canterbury Village Funding Company, Stephen M. Rostoff d/b/a Regency Funding Co., Cowesset Avenue Associates Funding Company, Stephen M. Rostoff d/b/a Woodland Funding Co., Stephen M. Rostoff d/b/a Pine Ridge Funding Company, Stephen M. Rostoff d/b/a The River Street Associates Funding Company, Stephen M. Rostoff d/b/a Sea Mist Funding Co., Richard S. Rostoff, Oceanvest Inc., Point East Associates, Stephen M. Rostoff d/b/a Carriage Hill Funding Co., Stephen M. Rostoff d/b/a North Providence Funding Co., 10-12 Josephine Street Association, Louden Road Development Corporation, Federal Deposit Insurance Corporation, as Liquidating Agent/Receiver of the Bank for Savings, Peter B. Finn as Trustee of the Pine Ridge Development Trust, Peter B. Finn as Trustee of Carriage Hill Estates Development Trust, Defendants.
• Court: U.S. District Court — District of Massachusetts

864 F. Supp. 215

John VASAPOLLI, Richard Solomon, Edward S. Ferguson, Sally E. Ferguson, George Hamilton, Charlotte Miller, Aaron Miller, Michael Miranda, Jr., Douglas Bassett, Kurt A. Lunden, Richard L. Dussault, Mary R. Dussault, David Stern, Anthony T. Zambuto, Debra J. Zambuto, Michael Tomsho, Ann Tomsho, Donald Booth, Erna Hooten, Daniel Issenberg, Herbert Bello, and Deanna Bello, Plaintiffs, v. Stephen M. ROSTOFF, David Rostoff, James I. Harris, Patriot Real Estate Development Corporation, Harvey Gertel, STE Development Corporation, Canterbury Village, Inc., as General Partner of Canterbury Village Limited Partnership, Peter Hicks, Trustee d/b/a Leslie F. MacNeil, Jr. Associates, The 36-40 Cohasset Avenue Associates, The 54-58 River Street Associates, Regency Arms Development Corporation, Woodland Hills General Partnership, The 32 Dean Avenue Associates, Paul Revere Development Corporation, Stephen M. Rostoff d/b/a Brookhaven Funding Company, Stephen M. Rostoff d/b/a Canterbury Village Funding Company, Stephen M. Rostoff d/b/a Regency Funding Co., Cowesset Avenue Associates Funding Company, Stephen M. Rostoff d/b/a Woodland Funding Co., Stephen M. Rostoff d/b/a Pine Ridge Funding Company, Stephen M. Rostoff d/b/a The River Street Associates Funding Company, Stephen M. Rostoff d/b/a Sea Mist Funding Co., Richard S. Rostoff, Oceanvest Inc., Point East Associates, Stephen M. Rostoff d/b/a Carriage Hill Funding Co., Stephen M. Rostoff d/b/a North Providence Funding Co., 10-12 Josephine Street Association, Louden Road Development Corporation, Federal Deposit Insurance Corporation, as Liquidating Agent/Receiver of the Bank for Savings, Peter B. Finn as Trustee of the Pine Ridge Development Trust, Peter B. Finn as Trustee of Carriage Hill Estates Development Trust, Defendants.

Civ. A. No. 92-11501-K.

United States District Court, D. Massachusetts.

August 31, 1993.

COPYRIGHT MATERIAL OMITTED

Chester A. Janiak, Elizabeth J. Maillett, Michael B. Weinberg, Burns & Levinson, Boston, MA, for plaintiffs John Vasapolli, Richard Solomon, Edward S. Ferguson, Sally E. Ferguson, George Hamilton, Charlotte Miller, Aaron Miller, Michael Miranda, Jr., Douglas Bassett, David Stern, Anthony T. Zambuto, Debra J. Zambuto, Michael Tomsho, Ann Tomsho, Donald Booth, Erna Hooten, Daniel Issenberg, Herbert Bello, Deanna Bello, Kurt A. Lunden.

Mitchel S. Ross, Kaye, Fialkow, Richmond & Rothstein, Chester A. Janiak, Elizabeth J. Maillett, Michael B. Weinberg, Burns & Levinson, Boston, MA, for plaintiffs Richard L. Dussault, Mary R. Dussault.

John F. Tierney, Lora M. McSherry, Tierney, Kalis, Adamopoulos & Lucas, Salem, MA, for defendants Stephen M. Rostoff, David Rostoff, Neil Rostoff, James I. Harris, Patriot Real Estate Development Corp., STE Development Corp., The 54-58 River Street Associates, Woodland Hills Gen. Partnership, The 32 Dean Ave. Associates, Paul Revere Development Corp. dba Brookhaven Funding Co., Stephen M. Rostoff dba Canterbury Village Funding Co. and Regency Funding Co., Cowesset Ave. Associates Funding Co., Stephen M. Rostoff dba Woodland Funding Co., Pine Ridge Funding Co., The River Street Associates Funding Co., Sea Mist Funding Co., Carriage Hill Funding Co. and North Providence Funding Co., 10-12 Josephine Street Ass'n.

Robert A. Jutras, Sheehan, Schiavoni & Mooradian, Haverhill, MA, for defendants Harvey Gertel, Louden Road Development Corp., Regency Arms Development Corp., Peter B. Finn, as trustee of Pine Ridge Development Trust and Carriage Hill Estates Development Trust.

John A. Christopher, Spitzer, Christopher, Gelineau & Arvanites, Salem, MA, for defendant Richard S. Rostoff.

Jan D. Silverman, Wakefield, MA, for defendant Point East Associates.

Martin P. Desmery, A. Van C. Lanckton, Craig & Macauley, Boston, MA, for defendant F.D.I.C., as Liquidating Agent/Receiver of the Bank for Savings.

Memorandum and Order

KEETON, District Judge.

In this civil action, plaintiffs assert claims based on an alleged scheme to induce plaintiffs to purchase condominium units through fraud and coercive conduct at closings. The Bank for Savings is alleged to be a participant in the scheme. The Federal Deposit Insurance Corporation ("FDIC"), as receiver for The Bank for Savings ("BFS"), moves for summary judgment.

Now before the court are: (1) FDIC's motion for summary judgment with supporting memorandum and affidavit (Docket Nos. 4-6, filed January 22, 1992); (2) plaintiffs' statement of facts, memorandum in opposition, and supporting materials (Docket Nos. 11-13, filed March 8, 1993; Docket Nos. 14-15, filed March 9, 1993); (3) FDIC's reply (Docket No. 18, filed April 9, 1993); (4) plaintiffs' motion for additional discovery with supporting affidavit (Docket Nos. 9 and 10, filed March 8, 1993); and (5) FDIC's opposition. The court heard oral argument on these motions on August 30, 1993.

I.

As a preliminary matter, plaintiffs have failed to comply with Local Rule 56.1, requiring a statement of disputed facts. Plaintiffs provide a general statement of facts "giving rise to genuine issues for trial." (Docket No. 11.) Plaintiffs do not attempt to state what specific facts are disputed and prevent summary judgment in favor of FDIC. Plaintiffs' "statement of material facts giving rise to genuine issues for trial" falls far short of a statement of material facts that are themselves disputed. Local Rule 56.1.

In any event, the facts stated by plaintiffs appear to be as follows. Each plaintiff (either alone or with another plaintiff) purchased a condominium and secured financing from BFS. Some plaintiffs purchased more than one unit. In each case, first mortgage financing was obtained from BFS. It does not appear disputed that plaintiffs signed the notes in the amounts stated by FDIC (with the exception of plaintiff Solomon, discussed in Section II.C, infra).

Plaintiffs allege that defendants, including BFS, are responsible for misrepresentations made in connection with a fraudulent scheme to induce plaintiffs to purchase the condominiums. These misrepresentations concerned: whether the purchase price reflected a "discounted price," alleged agreements to repurchase at the end of one year if the units could not be resold, amounts of condominium fees and real estate taxes, renovations on the condominium units, fair market values, and the terms of the financing notes (in particular, plaintiffs contend that they were told that they were signing notes at a long-term fixed rate when, in fact, the notes were for one or three year periods).

In addition, plaintiffs allege that the circumstances of the closings were coercive. Plaintiffs contend that they were not provided an opportunity to review documents before the closing and were given limited notice in advance of the closing date. Plaintiffs also contend that they were urged to move things along and sign papers without reading them.

In moving for summary judgment, FDIC contends that plaintiffs' claims are barred by 12 U.S.C. § 1823(e) and the D'Oench doctrine, discussed in detail below.

II.

The role of summary judgment is to "pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required." Wynne v. Tufts University School of Medicine, 976 F.2d 791, 794 (1st Cir.1992), cert. denied, ___ U.S. ___, 113 S.Ct. 1845, 123 L.Ed.2d 470 (1993). A court may allow a motion for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The court "must view the entire record in the light most hospitable to the party opposing summary judgment, indulging all reasonable inferences in that party's favor." Griggs-Ryan v. Smith, 904 F.2d 112 (1st Cir.1990).

"The moving party bears the initial burden of averring an absence of evidence to support the nonmoving party's case." Lawrence v. Northrop Corp., 980 F.2d 66, 68 (1st Cir. 1992) (internal quotation marks and citations omitted). Once this burden has been met, "the non-moving party must demonstrate the existence of a genuine issue of material fact pertaining to those issues on which it would have the burden of proof at trial." Kauffman v. Puerto Rico Tel. Co., 841 F.2d 1169, 1171 (1st Cir.1988). "In this context, `genuine' means that the evidence about the fact is such that a reasonable jury could resolve the point in favor of the nonmoving party and `material' means that the fact is one that might affect the outcome of the suit under the governing law." Wynne, 976 F.2d at 794 (citations omitted).

"A genuine issue of material fact does not spring into being simply because a litigant claims that one exists." Griggs-Ryan, 904 F.2d at 115. Rather, the party opposing summary judgment must set forth "hard evidence of a material factual dispute; the opposition cannot be conjectural or problematic but must have substance. Evidence which is merely colorable, or is not significantly probative will not preclude summary judgment." Id. (citations and internal quotation marks omitted).

III.

A. § 1823(e) and D'Oench Doctrine

The D'Oench doctrine reflects a federal policy "to protect the FDIC, and the public funds which it administers, against misrepresentations as to the securities or other assets in the portfolios of the banks which the FDIC insures or to which it makes loans." Vernon v. Resolution Trust Corp., 907 F.2d 1101, 1104 (11th Cir.1990), citing D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 457, 62 S.Ct. 676, 679, 86 L.Ed. 956 (1942). As a practical matter, "neither the FDIC nor state banking authorities would be able to make reliable evaluations if bank records contained seemingly unqualified notes that are in fact subject to undisclosed conditions." Langley v. Federal Deposit Ins. Corp., 484 U.S. 86, 91-92, 108 S.Ct....