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RFF Family Partnership, LP v. Link Development, LLC

United States District Court, D. Massachusetts

February 28, 2017

RFF Family Partnership, LP Plaintiff,
v.
Link Development, LLC and Steven A. Ross, individually and in his capacity as Trustee of BD Lending Trust, Defendants.

          MEMORANDUM & ORDER

          NATHANIEL M. GORTON, United States District Judge

         This is the second action (“2014 case”) involving the same parties related to a convoluted mortgage dispute. RFF Family Partnership, LP (“RFF”), the current owner of approximately 22 acres of land in Saugus, Massachusetts (“the property”), seeks both declaratory and monetary relief against Steven Ross, individually (“Ross”) and in his capacity as the trustee of the BD Lending Trust (“BD”), and Link Development, LLC (“Link”). Link formerly owned the property subject to a mortgage granted to BD (“the BD Mortgage”). Without discharging the BD mortgage, Link borrowed money from RFF and granted RFF a mortgage on the same property, representing to RFF that there were no other liens or encumbrances senior to its mortgage. Link also agreed that it would not create any new encumbrances on the property without RFF's consent. Link defaulted on the repayment of its loan after which RFF foreclosed and bought the property at auction.

         I. Background

         RFF claims that the mortgage granted by Link in favor of BD is void because it was executed by a now-disbarred attorney, Stuart Sojcher (“Sojcher”), who lacked authority to sign the BD Mortgage on behalf of Link. Sojcher diverted to his own benefit the proceeds of the loan which the BD Mortgage was intended to secure. RFF made a demand upon BD to discharge the BD Mortgage but BD refused. As a result, in June, 2011, RFF brought suit in this Court against both BD and Link, seeking to nullify the BD Mortgage (“the 2011 case”). That case resulted in two separate settlement agreements, one between BD and RFF and the other between BD and Link. Only BD was aware of both agreements.

         In the Link/BD agreement, Link agreed to dismiss a 2006 Massachusetts Superior Court lawsuit it had filed against BD in which BD sought a declaration that the BD Mortgage was invalid because Sojcher lacked authority to execute the mortgage. In consideration for the dismissal, BD agreed to pay Link $450, 000 up front and at least $650, 000 at a later date (the amount dependent upon the timing of the payments). To secure BD's payment obligation, BD provided Link with an assignment of the BD mortgage to be held in escrow and recorded only in the event of BD's default.

         In the RFF/BD agreement, BD agreed to discharge the BD Mortgage in exchange for a payment of $140, 000 from RFF. After executing the agreement, BD informed Link that it intended to discharge the BD Mortgage in fulfillment of its obligations under the RFF/BD settlement. Link, believing that such an action would be a breach of the Link/BD settlement, recorded the assignment of the BD Mortgage it had held in escrow.

         Because of the recording of the assignment by Link, BD claimed it no longer held the mortgage and therefore could not fulfill its obligation under the RFF/BD agreement. RFF successfully moved to enforce its settlement agreement with BD and the Court ordered BD to discharge the mortgage. BD nevertheless refused to do so. Consequently, RFF filed the 2014 case, asserting claims for:

1) declaratory judgment against Link and BD that the BD Mortgage is void (Count I);
2) breach of contract against BD, seeking damages as a result of the breach of the RFF/BD settlement agreement (Count II)
3) negligent and/or intentional misrepresentation against Ross and BD for statements made in connection with the RFF/BD settlement agreement (Count III);
4) slander of title against Link and BD seeking damages arising from the failure of Link and BD to discharge the BD Mortgage (Count IV) and
5) violation of the Consumer Protection Act (M.G.L. ch. 93A) against Ross and BD (Count V).

         Link and BD filed cross-claims against each other which, for reasons unimportant to the case at hand, are no longer at issue. After the parties filed cross-motions for summary judgment, the Court entered a Memorandum and Order in which it concluded that BD had breached the RFF settlement agreement which it found to be valid. The Court declined, however,

[to] enter summary judgment on behalf of RFF on the declaratory judgment with respect to the validity of the BD Mortgage. While Attorney Sojcher lacked authority to enter into the BD Mortgage, RFF will be judicially estopped from denying the validity of the BD Mortgage. RFF has successfully relied upon its contention in related cases that the BD Mortgage is valid and RFF's decision to settle with BD Lending was predicated upon such validity.

         The Court entered judgment in favor of RFF on Count II (breach of contract) concluding that, as a matter of law, BD breached the terms of the settlement agreement. On Count I (declaratory relief), however, the Court entered judgment in favor of Link.[1] The Court also entered judgment in favor of Link on Count IV (slander of title) because that claim was predicated on the invalidity of the BD Mortgage. That left Counts III, V and the issue of damages on Count II to be resolved at trial. The case went to trial in January, ...


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