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Adar Investments, LLC v. Bayview Loan Servicing, LLC

Appeals Court of Massachusetts

June 26, 2015

Adar Investments, LLC , & others [1]
Bayview Loan Servicing, LLC , & others. [2]

Editorial Note:

This decision has been referenced in an "Appeals Court of Massachusetts Summary Dispositions" table in the North Eastern Reporter. And pursuant to its rule 1:28, As Amended by 73 Mass.App.Ct. 1001 (2009) are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 N.4, 881 N.E.2d 792 (2008).


Adar Investments, LLC (hereinafter the plaintiff) and Bayview Loan Servicing, LLC (hereinafter the defendant), sophisticated parties experienced in commercial real estate transactions, entered into an agreement at arm's length for the purchase of four rental properties. The properties proved unprofitable and the plaintiff brought an action in Superior Court claiming the defendant misled it during the sales process. The Superior Court entered summary judgment in favor of the defendant, which the plaintiff now appeals. Reviewing the grant of summary judgment de novo, and considering the evidence in the light most favorable to the plaintiff, we conclude that the defendant was entitled to judgment as a matter of law. We affirm.


In May 2005, the defendant financed the $2.6 million sale of four multi-unit rental properties at issue in this appeal to a previous purchaser. In connection with that sale, the defendant had appraisals performed indicating the value of the properties as of that time (May 2005 appraisals). The defendant subsequently foreclosed on the properties in December, 2005, after the prior purchaser defaulted on the loans. The defendant prepared a report (December 2005 report) relating to the properties' values, which it used in connection with its purchase of the properties at the foreclosure sale for nearly $1.68 million.

In 2005 and 2006, the plaintiff worked with a real estate broker to purchase investment properties. This resulted in the plaintiff's purchase of a rental property (unrelated to this case) in Springfield. The broker subsequently informed the plaintiff of the four rental properties in Holyoke, which are the properties at issue in this appeal. The broker provided the plaintiff with the May 2005 appraisals, which the defendant had given to the broker. The broker also provided the plaintiff a report prepared by the broker himself that contained an analysis of the properties' values, including rental income projections (2006 projections). The plaintiff toured every rental unit of the properties, but did not conduct any further inspection of the premises or obtain up-to-date appraisals.

The plaintiff's attorney sent the defendant a purchase and sales agreement on February 15, 2006, specifying that the properties were to be sold " as is, where is, with all faults" and that the plaintiff was waiving all inspections. Moreover, the offer disclaimed any warranties and acknowledged the plaintiff was not relying on " any information provided or to be provided by seller or any other party." The offer also provided that the defendant, as seller, was to pay the broker's commission.

The defendant also financed the sale. To that end, the defendant prepared conditional preapproval letters dated February 24, 2006 (preapproval letters), which included information about the values of the properties that were based on the plaintiff's purchase price. At about the same time, the defendant prepared an internal document including value estimates and projections about the properties (February 2006 report).

On March 6, 2006, the plaintiff signed an agreement to purchase the four properties from the defendant for $1.93 million. The final agreement also included language indicating the plaintiff was not relying on any representations made by the defendant. The plaintiff additionally signed personal guaranties for the loan.

On February 3, 2009, the plaintiff brought a nine-count complaint in Superior Court after the properties did not prove to be as profitable as hoped. The claims included fraud (count I), negligent misrepresentation (count II), breach of fiduciary duty (count III), breach of the covenant of good faith and fair dealing (count V), and violations of G. L. c. 93A (count VIII).[3] The plaintiffs additionally sought a declaratory judgment " of the rights, liabilities and obligations of the parties. . ." (count IX). The Superior Court granted summary judgment in favor of the defendant, and the plaintiff timely filed this appeal.


We review de novo the grant of summary judgment, Miller v. Cotter, 448 Mass. 671, 676, 863 N.E.2d 537 (2007), and determine " whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law." Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991). In making this determination, we " consider the record and the legal principles involved without deference to the motion judge's reasoning." Clean Harbors, Inc. v. John Hancock Life Ins. Co., 64 Mass.App.Ct. 347, 357 n.9, 833 N.E.2d 611 (2005).

Counts I and II rely on two separate theories of fraud and misrepresentation. First, the plaintiff alleges the defendant is liable for statements made by the broker to the plaintiff, specifically those in the 2006 projections. Second, the plaintiff alleges the defendant is liable for failing to disclose the December, 2005, and February, 2006, reports after sending the preapproval letters. Both claims fail for multiple reasons.

The first theory fails because the evidence, when viewed in the light most favorable to the plaintiff, does not establish that the broker was the defendant's agent. No written agency agreement existed and both the broker and the defendant denied the existence of such a relationship. Nor are we persuaded by the plaintiff's argument that an agency relationship developed from the defendant paying the broker's commission. Sellers are typically liable for such commissions regardless of whether the broker is an independent broker or an exclusive agent of the seller. SeeTristram's Landing, Inc. v.Wait, 367 Mass. 622, 625, 327 N.E.2d 727 (1975). The plaintiff's claim regarding the broker's commission is all the more dubious in light of the fact that it was the plaintiff who proposed that the defendant pay the commission. Moreover, plaintiff Roman Knop testified at a deposition that the broker represented only the plaintiff as the buyer in the ...

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