United States District Court, D. Massachusetts
REPORT AND RECOMMENDATION
DAVID H. HENNESSY, Magistrate Judge.
Currently pending before the court are three motions to dismiss plaintiff J Graham Zahoruiko's ("Zahoruiko" or "plaintiff") complaint, which contains twenty-three counts originally arising from the defendants' alleged actions in connection with a bank loan obtained by plaintiff in or around 1999. The Honorable Timothy S. Hillman has referred the defendants' motions (Docket # 39, 41, 46) to me for a report and recommendation. See Docket # 61. As discussed below, plaintiff lacks standing to bring this action, and accordingly I recommend that his complaint be dismissed in its entirety.
Except where otherwise indicated, the following facts are culled from plaintiff's seventyfive-page complaint ("Complaint"), his accompanying affidavit, and the voluminous exhibits thereto. In 1995 plaintiff created a web development company called SpaceNet Corporation, later renamed SpaceWeb Corporation and subsequently Refresh Software Corporation ("Refresh"). Complaint at ¶ 42. Starting in May 1998, the company (then named SpaceWeb Corporation) obtained from Fleet Bank ("Fleet") several business lines of credit; the last one, secured on May 26, 1999, provided plaintiff with $100, 000 and replaced the previous lines of credit. Id. at ¶¶ 43, 46-47; Docket # 2-1 at Ex. 6. The loan carried a floating interest rate based on Fleet's prime rate (then 11.75%) plus an initial margin of 4 per cent, and required plaintiff's agreement that the bank could sell all or part of the loan. Id. at ¶¶ 44-45; Docket # 2-1 at p. 114-18. It also included plaintiff's personal guaranty of payment. Docket # 2-1 at p. 125.
At some point in 2000, Fleet sold a number of its assets to Sovereign Bank ("Sovereign"), which resulted in plaintiff receiving statements from, and making payments to, Sovereign concerning the Fleet loan. See Docket # 2-1 at Ex. 1 ("Zahoruiko Aff.") ¶ 30; Docket # 2-2 at Ex. 20. On or around June 18, 2002 Sovereign sold the loan to Premier Capital, LLC ("Premier"). Docket # 2-3 at Ex. 29; see also Docket # 2-1 at Ex. 4 ¶ 4; Ex. 7 ¶ 11. As such, when plaintiff began struggling to make timely payments, he received a letter from Premier that he and his company (now named Refresh Software) owed $99, 949.81. Id. at ¶ 49; see also Docket # 47-1 at p. 13. On August 8, 2002, Premier informed plaintiff that the note was in default, with an outstanding balance of $103, 023.08, and demanded payment for same. See Docket # 2-1 at Ex. 8. Approximately two months later, Premier sought, and was granted, a writ of attachment on plaintiff's home. See Docket 2-1 at Exs. 4, 7.
Although plaintiff concedes that Refresh was in default, he takes issue with the fact that it was Premier-an entity with which he had no prior dealings-that secured the attachment on his home. See Complaint at ¶ 50. And while he appears to concede that Premier sent a letter via Certified Mail concerning Premier's purchase of his debt,  plaintiff states that he does not recall receiving this correspondence. Id. at ¶ 51. Further, because the letter "was not on a unique stationery [sic]... to suggest that it came from a legitimate source, " and that he was not contacted by telephone about the debt, plaintiff avers that "the contents of the alleged mail did not look sophisticated enough to be taken seriously." Id . Plaintiff similarly challenges Premier's "erroneously attaching Plaintiff's personal home to secure a corporate debt, " stating that Premier's "uncorroborated claim that the debt was assigned to it" allowed for its "unfettered right to attach [plaintiff's] home." See id. at ¶¶ 52 54.
Believing that the Fleet loan "was made for [Refresh's] use - not that of Plaintiff personally, " plaintiff hired an attorney and reached a tentative settlement with Premier in April 2003. Id. at ¶ 59. However, when plaintiff's attorney asked defendants for certain unredacted records, defendants responded by filing a notice of default, a tactic which, according to plaintiff, "evinces the intricacies of the racketeering organization." Id . The Superior Court entered a default judgment on June 16, 2003, which plaintiff shortly thereafter sought to vacate. See Docket # 2-1 at Ex. 9. Premier then agreed to settle the litigation upon plaintiff's guaranty of Refresh's debt in the form of a personal promissory note (the "Note") in the amount of $128, 000. Complaint at ¶ 60. By execution of the Note (which included a personal guaranty by plaintiff) on July 1, 2003, the litigation was settled. Id. at ¶ 61; Docket # 2-1 at Ex. 10. The accompanying Settlement Agreement expressly provided that by execution of the Note, plaintiff and Refresh released Premier and all its past assigns from any and all claims arising out of or relating to the claims of plaintiff's default. Docket # 2-1 at Ex. 10.
Over the next several years, Refresh paid approximately $20, 000 due on the Note. Complaint at ¶ 62. In early 2005 however, "things had taken a turn for the worse" and on March 5, 2007, Premier informed plaintiff that he and Refresh were in default. Id .; Docket # 2-1 at Ex. 13. Plaintiff replied that the company was in financial distress but that it would try to continue making timely payments. Complaint at ¶ 64; Docket # 2-1 at Ex. 14. A similar letter from Premier followed in November 2007. Docket # 2-1 at Ex. 15.
In March 2008, Refresh's new Chairman and President Robert Angelo and Premier Vice President/Account Manager John D. Cummings, Jr. ("Cummings") discussed a possible forbearance. Complaint at ¶ 66. By letter dated March 24, 2008, Cummings proposed a forbearance agreement to accommodate Refresh's request for same. Docket # 2-1 at Ex. 16. The resulting agreement provided in relevant part that: (1) as of May 15, 2008 the total outstanding balance owed was $111, 879.01; (2) the time for plaintiff's final payment was extended to April 30, 2012; (3) Refresh was to pay a one-time forbearance fee as well as forty-eight monthly payments of $2, 400 (terms that plaintiff now refers to as "quite onerous"). See Docket # 2-1 at Ex. 17; Complaint at ¶ 70. On May 30, 2008, the forbearance agreement was executed-by Cummings, as well as by plaintiff both as Refresh's President and as a personal guarantor. See Docket # 2-1 at Ex. 17. Notwithstanding, plaintiff stresses that the companies' correspondence gave "every inference that the note belonged to the corporation, " and that the forbearance agreement references only Refresh. See Complaint at ¶ 66-67. Similarly, although the agreement, signed twice by plaintiff, stated that Refresh had requested Premier's forbearance and that Refresh "had an opportunity to review th[e] agreement and its terms with independent legal counsel of [his] choice, " plaintiff's Complaint contends that defendants "badger[ed] and harass[ed] Plaintiff into signing a personal guarantee." See Docket # 2-1 at Ex. 17; Complaint at ¶ 67. He also characterizes the parties' negotiations as Premier refusing to provide a requested accounting and instead "demand[ing] that Refresh... and Plaintiff execute the forbearance agreement or it would reinstitute a lawsuit against them." Complaint at ¶ 69.
Following the agreement's execution, Refresh's struggles with repayment continued. Plaintiff complains that he requested, but was denied, an accounting of how Refresh's payments were being applied; that the billing schedules were perplexing; that he never understood how Premier was keeping its balances and invoices current; and that from 2003 through 2012, he did not receive amortization schedules. Complaint at ¶¶ 69-70. Shortly after the agreement went into effect, Refresh once again went into default. See Complaint at ¶ 71, Docket # 2-4 at p. 204. On April 14, 2010, counsel for Premier sent a letter to Mr. Angelo as well as to plaintiff "[i]ndividually and as [g]uarantor" providing notice of the default and demanding that (1) Refresh and (2) plaintiff as guarantor pay the then-current balance of $111, 872.44. See Docket # 2-4 at Ex. 44.
Approximately three months later, after Refresh had paid over $92, 000 but was unable to continue making payments under the forbearance agreement, Premier brought an action in Massachusetts Superior Court against Refresh and plaintiff seeking payment pursuant to the Note, guaranty, and forbearance agreement. Id. at ¶ 74; Docket #2-1 at Ex. 18. On March 27, 2012, the Superior Court allowed Premier's motion for summary judgment, dismissed plaintiff's counterclaims, and ordered an assessment of damages. Docket # 47-1 at Ex. C.
In May 2012, plaintiff filed a voluntary petition for Chapter 13 bankruptcy, which later was converted to a Chapter 7 proceeding. Complaint at ¶ 75. In November 2012, Premier filed an adversary proceeding in which it objected to the discharge of plaintiff's debt. See Docket # 47-1 at Ex. D. In May 2013, plaintiff filed an amended schedule of his assets, which made no reference to a potential claim against Premier or any of the other defendants herein (apart from its listing the 2010 Superior Court action, in which plaintiff's counterclaims by that time had been dismissed). See Docket # 47-1 at Ex. F. In connection with the adversary proceeding, in October 2013 the Bankruptcy Court found that plaintiff twice presented false information and on another occasion concealed from the court relevant information. See Docket # 47-1 Ex. H at pp. 2-4. In a decision plaintiff states resulted from his attorney forfeiting his arguments, causing the bankruptcy judge to "t[ake] the bait" of "[d]efendants['] lies, " the court denied plaintiff a bankruptcy discharge. See id.; Complaint at ¶ 75.
On January 17, 2014 the Superior Court denied plaintiff's motion to vacate the entry of summary judgment, and on April 18, 2014, Refresh and plaintiff were ordered to pay Premier $178, 377.87. Docket # 47-1 at Ex. L; Docket #2-4 at Ex. 30. In December of that year, the Superior Court issued a final judgment directing Refresh and plaintiff to pay Premier that sum, plus approximately $95, 000 in interest, $42, 000 in ...