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Reem Property, LLC v. Engleby

United States District Court, D. Massachusetts

April 21, 2017

REEM PROPERTY, LLC, Plaintiff,
v.
ROBERT T. ENGLEBY, Defendant.

          MEMORANDUM AND ORDER

          Patti B. Saris Chief United States District Judge

         INTRODUCTION

         This case involves a dispute over real estate in Newton, Massachusetts. Plaintiff Reem Property, LLC, (“Reem”) which entered into an agreement to purchase the property, brings this diversity action against the seller Robert Engleby alleging breach of contract (Count I), breach of implied covenant of good faith and fair dealing (Count II), unjust enrichment (Count III), conversion (Count IV), and violation of Massachusetts General Laws ch. 93A (Count V).

         In April 2016, Engleby brought a special motion to dismiss the complaint under Massachusetts General Laws ch. 184, § 15(c) and Federal Rule of Civil Procedure 12(b)(6), and a motion to dissolve the memorandum of lis pendens.

         On July 20, 2016, Magistrate Judge Bowler issued a report and recommendation to dismiss Count I, breach of contract, under Massachusetts General Laws ch. 184, § 15(c), but recommended the denial of the motion to dismiss the remaining counts and to dissolve the lis pendens. Docket No. 32. After hearing, this Court adopted Judge Bowler's Report and Recommendation on September 21, 2016, and assumes familiarity with it.

         After an opportunity for discovery, Engleby moved for summary judgment on Counts II through V and his counterclaim for breach of contract. Docket No. 62. Reem moved for summary judgment as to Engleby's counterclaim. Docket No. 65. After hearing, the Court requested additional briefing on the counterclaim -- the request for an award of attorney's fees and costs of $41, 628.00 pursuant to Massachusetts General Laws ch. 184, § 15(c). The Court dissolved the memorandum of lis pendens on March 1, 2017. Docket No. 79.

         The Court ALLOWS Engleby's motion for summary judgment on Counts II through V. With respect to Engleby's counterclaim and motion for attorney's fees, Docket No. 81, the Court ALLOWS Engleby's motion for summary judgment and request for attorney's fees, with certain deductions. The Court DENIES Reem's motion for summary judgment. Docket No. 65.

         FACTUAL BACKGROUND

         For the purposes of the motion for summary judgment, the facts are taken in the light most favorable to the non-moving party and are undisputed except where stated.

         The highest bidder for the property at the foreclosure sale submitted a bid of $430, 000, but defaulted on the terms of the Memorandum of Sale. Reem was the next highest bidder with a bid of $275, 000. Engleby was the third highest bidder at $250, 000. On June 10, 2015, Reem and Engleby entered into a Memorandum of Sale of Real Estate. The agreement stated that Reem would buy the Property from Engleby for $275, 000 with an initial deposit of $10, 000 and that “TIME IS OF THE ESSENCE IN THIS AGREEMENT AS TO BUYERS OBLIGATIONS HEREUNDER.” Docket No. 1, ex. 1 at 14. Reem paid the $10, 000 deposit. The balance was due on July 10, 2015 on or before 1:00 p.m.

         On July 9, 2015, Reem paid an additional $10, 000 to obtain a 30-day extension of the time for payment. Engleby also informed Reem that he was only willing to extend for an additional 30 days if Reem expressly agreed that if it did not tender the balance of the purchase price on or before the closing date, for any reason, Engleby is entitled to “retain the $20k paid as a deposit, without argument, challenge or any demand that it be refunded.” Docket No. 24, ex. 3 at 2. Reem agreed to these terms and the extension agreement was signed the next day. The “time is of the essence” clause was carried over in the extension.

         Although Reem attempted to wire the amount prior to the due date, he was unsuccessful. Reem did not make a payment until August 13, 2015, three days after the extension expired. The failure to meet the deadline was caused by a review by U.S. authorities under the money laundering and bank regulations because the money was wired internationally from Lebanon, where the sole manager of Reem was located at that time.

         After receiving Reem's payment, Engleby immediately informed Reem of its default and advised Reem its funds would be returned. The funds were returned on August 20, 2015. However, Engleby kept the $20, 000.

         As the third highest bidder at $250, 000, Engleby sold the property to Dornoch Equity Services, LLC on August 20, 2015 for $250, 000, the same amount as his bid. ...


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