United States District Court, D. Massachusetts
MEMORANDUM OF DECISION
TIMOTHY S. HILLMAN, District Judge.
In October 2013, this Court held a jury trial in this matter where the Plaintiff presented evidence on her jury and jury waived claims against Defendant Marjem Mortgage Corporation ("Marjem Mortgage") and Defendant Marjem Recovery, LLC ("Marjem Recovery") (collectively, the "Marjem Defendants") and against Defendant Maryann Kozlowski ("Mrs. Kozlowski") and Defendant William Kozlowski ("Mr. Kozlowski") (collectively the "Kozlowskis"). On November 12, 2013, this Court held a bench trial on Plaintiff Virginia Wright's ("Mrs. Wright") jury waived claims of Breach of Implied Covenant of Good Faith and Fair Dealing, Breach of Mortgagee's Duty of Good Faith, Unconscionability, Rescission, Violation of M.G.L. c. 93A, and Declaratory Judgment against the Marjem Defendants, and the jury waived claim of Indemnification against the Kozlowskis. The Court now publishes its findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
Findings of Facts
On March 24, 1960, Mrs. Wright and her late husband acquired the property located at 75 Howe Avenue, Shrewsbury, Massachusetts (the "Property") subject to a mortgage. This mortgage was paid off well before the maturity date. On February 16, 2005, Mrs. Wright executed a new mortgage on the Property in the amount of $125, 000.00 to Lex Lubar, Trustee of Clover Trust. On December 12, 2006, Mrs. Wright provided a mortgage against the Property in the amount of $102, 000.00 (the "First Mortgage"). Of this $102, 000.00, $86, 666.02 was used to pay off the mortgage in favor of the Clover Trust. Attorney Elizabeth Grimes ("Grimes") acted as the settlement agent for this mortgage.
In 2007, Mrs. Wright's daughter, Mrs. Kozlowski, and her husband, Mr. Kozlowski, were interested in opening a restaurant and needed funding to purchase the real estate where the restaurant would be located and for renovations, equipment, and furniture. On October 24, 2007, the Kozlowskis executed a commercial promissory note in the amount of $190, 000.00 in favor of Marjem Mortgage (the "Note") in order to obtain the money needed to open a restaurant business located at 118 Elm Street, Millbury, Massachusetts (the "Restaurant Property"). The Kozlowskis had prior restaurant experience, having operated a Worcester restaurant called Riley's. The Note was secured by a mortgage on the Restaurant Property in the amount of $190, 000.00. The Note was also secured by a guaranty by Mrs. Wright in favor of Marjem Mortgage (the "Guaranty"). The Guaranty was secured by a mortgage against the Property in the amount of $190, 000.00 (the "Second Mortgage"). The terms of the Note provided that the rate of interest due on the note was in the amount of 13% per annum and the maturity date was October 24, 2008.
Attorney Scott Jamieson ("Jamieson") represented Marjem Mortgage at the closing for the Second Mortgage. Though Grimes does not recall this closing, the evidence indicates she represented the Kozlowskis in this transaction. During the closing, Mrs. Wright, who was unrepresented, sat next to Jamieson at one end of a long table, while Mr. and Mrs. Kozlowski sat at the other end. Jamieson asked Mrs. Wright three times if she understood what she was signing. Both Mr. and Mrs. Kozlowski testified that they heard Jamieson ask Mrs. Wright if she understood three times, but neither could hear Mrs. Wright answer. Jamieson witnessed Mrs. Wright's signature for the Second Mortgage and the Guaranty and notarized her signature for the Second Mortgage. Jamieson testified that his duties as a notary include verifying that the person signing the document is who they claim to be and that they understand the document they are signing. There was no evidence introduced at trial that Mrs. Wright indicated at any time during the closing that she did not understand what she was doing.
Mrs. Wright had told Mrs. Kozlowski that she wanted to help her and her husband open the restaurant, and that she thought the restaurant was a good idea. Mr. Kozlowski testified that he understood that Mrs. Wright wanted to help him and his wife out, but that she did not realize "how far she was getting into anything, " and that it could have been a car loan. Mrs. and Mr. Kozlowski both testified that they did not read the documents they signed when executing the Note.
At the time she executed the Second Mortgage, Mrs. Wright's monthly income came from a pension of approximately $900.00 and social security benefits of approximately $1, 200.00. She was about 80 years old. She lived on her own at her home in Shrewsbury, Massachusetts, spoke to Mrs. Kozlowski several times a day and saw Mrs. Kozlowski several times a week. Mrs. Kozlowski often drove Mrs. Wright to her medical appointments. Mrs. Wright's son, Richard Wright, was living in New Jersey at the time Mrs. Wright executed the Second Mortgage.
Mrs. Wright's medical records from December 21, 2006 through May 9, 2011 show she was treated by Dr. Bergman. During this time she was not prescribed any medication by Dr. Bergman or the Reliant Medical Group for mental dysfunction. On March 9, 2007, Mrs. Wright was observed as "well and in no acute distress." On April 17, 2007 there is a notation that Mrs. Wright was aware that she did not show up for lab tests. Some memory loss was noted on June 17, 2009, and was attributed to lack of sleep due to knee pain and a possible B12 deficiency or hypothyroid. On July 19, 2009, an orthopedist noted that Mrs. Wright had a "clear understanding of directions."
Suellen Milley ("Milley"), a former employee of the Shrewsbury Federal Credit Union, knew Mrs. Wright for over twenty years as a customer of the Credit Union. Milley testified that Mrs. Wright began to show signs of forgetfulness over the years, particularly during the three or four years before she moved to New Jersey. Milley further testified that Mrs. Wright remembered signing things, but not what they were for, and towards the end of this time period did not remember signing documents at all.
In February or March of 2011 Mrs. Wright moved to New Jersey to live with Richard Wright. On March 29, 2011, Mrs. Wright executed the Last Will of Virginia Wright, leaving everything to her son, Richard, because she had already "provided for her [daughter, Maryann Kozlowski] during [her] lifetime." The attorney who drafted this will, Sharon L. Bennett, swore that Mrs. Wright was of sound mind and under no constraint when she signed the will. On March 29, 2011, Mrs. Wright executed a Durable Health Care Power of Attorney and Living Will of Virginia Wright under which she swore that she was of sound mind. On April 18, 2011, Mrs. Wright was diagnosed with dementia.
The Kozlowskis defaulted on the Note. In March 2008, Marjem Mortgage notified the Kozlowskis of its intent to foreclose on their mortgage. In November 2008, Marjem Mortgage attempted to help the Kozlowskis meet their payment obligations on the Note through a forbearance and extension agreement (the "Forbearance Agreement") which lowered the interest rate and monthly payments on the Note and extended the maturity date to October 15, 2009. Marjem did not send Mrs. Wright any correspondence regarding this proposed agreement. Mr. and Mrs. Kozlowski and Mrs. Wright signed the Forbearance Agreement on January 8, 2009. Alan Shocket, an attorney for Marjem Mortgage who drafted the Forbearance Agreement, testified that he believed entering into the Forbearance Agreement was in the best interest of all parties involved. He further testified that he did not obtain any additional information about the Kozlowskis income at the time he drafted the Forbearance Agreement.
The Kozlowskis were unable to make the payments under the Forbearance Agreement and Marjem Mortgage looked to Mrs. Wright's Guaranty for repayment of the Note. Mrs. Wright did not make any payment to Marjem Mortgage in satisfaction of her Guaranty, despite multiple demands. In August 2010, Marjem Mortgage notified ...