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Santander Bank, N.A. v. Baldwin Realty, LLC

United States District Court, D. Massachusetts

April 17, 2015

SANTANDER BANK, N.A., Plaintiff,
BALDWIN REALTY, LLC; BRIAN J. STRASNICK; and CRAIG STRASNICK, in his capacity as Trustee of Cliff Road Realty Trust, Defendants.


F. DENNIS SAYLOR, IV, District Judge.

This action arises out of a commercial mortgage transaction. Plaintiff Santander Bank, N.A. seeks to recover a post-foreclosure deficiency balance allegedly owed under loan documents executed by defendant Baldwin Realty, LLC, and guaranteed individually by defendant Brian J. Strasnick.

On September 9, 2014, defendants filed a counterclaim with their answer to plaintiff's amended complaint. The counterclaim alleges intentional interference with advantageous contractual and business relations; breach of the implied covenant of good faith and fair dealing; breach of the mortgagee's duty of good faith in conducting a foreclosure sale; and violation of Mass. Gen. Laws ch. 93A. Plaintiff has moved to dismiss the counterclaim for failure to state a claim upon which relief can be granted. For the reasons set forth below, the motion will be granted in part and denied in part.

I. Background

A. Factual Background

Unless otherwise noted, the following facts are presented as stated in the answer and the counterclaim.[1]

On July 27, 2006, Sovereign Bank (the predecessor to plaintiff Santander Bank, N.A.) provided a $2 million line of credit and an $800, 000 term loan to Willow Medical Laboratories & Medical Center, a Massachusetts business trust. (Countercl. Ex. A). Baldwin Realty, LLC, guaranteed the obligations of Willow to the Bank. ( Id. ) The same day, Baldwin also executed a Term Promissory Note to the Bank in the principal amount of $4 million. The debts were secured, at least in part, by a mortgage on real estate located at 270 and 280 Union Street in Lynn, Massachusetts, which included a multi-tenant office building and two parking lots ("the Property"). ( Id. Ex. A & ¶ 6). The lending arrangements were modified and revised multiple times. Beginning in 2010, defendant Brian Strasnick, the owner of Baldwin and Willow, guaranteed all of those debts in his individual capacity. ( Id. Ex. A & ¶¶ 5, 7).

At some point, Willow went out of business. ( Id. ¶ 5). In 2012, the Bank declared a default on the obligations of Baldwin and Willow under the agreements. (Compl. ¶ 31; Answer ¶ 31). On May 1, 2012, the parties executed a Forbearance and Modification Agreement. (Compl. ¶ 32; Answer ¶ 30). The agreement stated that it would terminate no later than July 15, 2012. (First Forbearance Agreement at 3).

On September 28, 2012, the Bank entered into a written agreement with defendants Baldwin and Strasnick that relieved Willow of any further obligation to the Bank. (Compl. ¶ 30; Answer ¶ 30). That agreement did not relieve Baldwin or Strasnick of their obligations under the loans. (Compl. ¶ 30; Answer ¶ 30).

On October 31, 2012, following expiration of the first forbearance agreement, the parties executed a second such agreement. (Compl. ¶ 33; Answer ¶ 33). That agreement stated that it would terminate no later than September 30, 2013. (Second Forbearance Agreement at 2).

On October 4, 2013, an appraisal report of the Property was prepared for the Bank by Patriot Properties, Inc. (Countercl. at 39). The report appraised the Property at a value of $3.8 million. ( Id. ).

On March 27, 2014, the parties entered into a third forbearance agreement. (Compl. ¶ 36; Answer ¶ 36). That agreement stated that it would expire no later than June 26, 2014. (Third Forbearance Agreement at 5). On June 6, 2014, the agreement was amended to provide for an expiration date of July 30, 2014. (Compl. ¶ 37; Answer ¶ 37; Am. to Third Forbearance Agreement at 1). In addition, the amendment provided that, absent non-compliance with the terms of the agreement, the Bank would continue any foreclosure sale until August 6, 2014. (Am. to Third Forbearance Agreement at 2).

The amendment also states:

Obligors do hereby acknowledge that upon the expiration of the Forbearance Period or in the event of any default under the Forbearance Agreement or this Amendment, the outstanding balance of the Loans shall be immediately due and payable without any requirement of notice to Obligors or further demand by Lender and Lender shall have no continuing obligation to forbear under this Agreement. Obligors hereby acknowledge that Lender is not obligated to further negotiate the terms and conditions of such repayment and that Lender shall have the right to pursue its remedies without further delay, in its sole discretion.

( Id. at 2).

As of June 17, 2014, Baldwin and Willow owed $2, 151, 083.67 in principal and a total of $3, 505, 65.60 including interest and fees. (Countercl. ¶ 9).

The third forbearance period expired on July 31, 2014, with an outstanding balance still owed under the loan agreements. (Compl. ¶ 38).[2]

On August 6, 2014, either Charles Patsios or a company known as Delphi Realty Associates made a written offer to Baldwin to purchase the Property for $3, 250, 000. (Countercl. ¶ 12).[3] According to the counterclaim, Delphi is a real estate brokerage and investment company with a current portfolio of properties worth approximately $14 million. ( Id. ). Delphi's offer contained no financing contingency; however, the offer was subject to contingencies for "full structural building inspection and review of title." ( Id. & Ex. F). Patsios made a deposit of only $1, 000, which would be forfeited if he did not fulfill his obligations under the agreement. The offer provided that a purchase and sale agreement was to be signed by September 11, 2014, and that Patsios would put down an additional $99, 000 at the time of the purchase and sale. ( Id. ¶¶ 12, 13 & Ex. F). Baldwin accepted the offer on August 7, 2014. ( Id. ¶ 13 & Ex. F).

Upon accepting the Delphi offer, Baldwin and Strasnick informed the Bank of the offer and sought a further forbearance agreement. ( Id. ¶ 15). As consideration, they offered additional security, including a mortgage on Strasnick's personal residence and two other properties. ( Id. ). The Bank rejected that offer and did not make a counteroffer. ( Id. ¶ 16). Strasnick then offered to pay the Bank $25, 000 per month until the sale to Delphi closed, in exchange for a ...

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