Heard: November 7, 2017.
action commenced in the Superior Court Department on January
29, 2016. A special motion to dismiss was heard by William F.
A. Jacobson for the plaintiff.
K. DeMello (Rosemary A. Traini also present) for the
Wolohojian, Massing, & Wendlandt, JJ.
appeal presents occasion to clarify the scope of this
court's review of an interlocutory order denying a
special motion to dismiss brought pursuant to G. L. c. 184,
§ 15, the lis pendens statute. Here, the defendants
sought to dismiss the entire action, including (1) one claim
supporting the memorandum of lis pendens and affecting title,
and (2) other claims that were not the basis for the lis
pendens. We hold that our review is limited to those portions
of the interlocutory order supporting the memorandum of lis
Realty, LLC (Citadel), filed a complaint in the Superior
Court against the defendants, seeking to void the foreclosure
sale of Citadel's real property in the Dorchester section
of Boston (property). In addition, Citadel sought damages and
reformation of the underlying mortgages. Following the filing
of its verified amended complaint, Citadel filed a motion for
approval of a memorandum of lis pendens, pursuant to G. L. c.
184, § 15(b), which was allowed. The defendants filed a
motion opposing the approval of the memorandum of lis pendens
and seeking to dismiss the complaint, which was, in part, a
special motion to dismiss pursuant to G. L. c. 184, §
15(c) . The motion was denied. The defendants filed the
present interlocutory appeal from the denial of their motion
to dismiss, purporting to appeal the motion judge's
decision declining to dismiss both the claim supporting the
lis pendens and affecting title, and the claims that did not
support the lis pendens.
forth the facts from the verified pleadings and affidavits
that were before the judge. G. L. c. 184, § 15(c) . In
2011, Mario Lozano approached Endeavor Capital, LLC
(Endeavor),  seeking a loan in connection with
the property. Endeavor and Lozano entered into a term sheet,
pursuant to which Citadelborrowed $250, 000 from one of the
Endeavor subsidiaries. The loan was secured by a first
mortgage (2011 mortgage) on the property and was guaranteed
by Lozano personally. The 2011 mortgage had a six-month term,
a fourteen percent interest rate, and was subject to a six
percent origination fee.
was unable to repay the principal within the six-month term.
Thereafter, Citadel entered into a series of six-month
extensions with Endeavor Capital Funding, LLC (ECF). Each
time, Citadel was unable to refinance with another lender,
and was under the threat of foreclosure. Each time, Citadel
paid another six percent fee, and increased the principal
balance. All told, Citadel paid $121, 742.06 in interest-only
payments, but was unable to repay the principal before
termination of the last extension.
2014, Lozano approached Endeavor to discuss a potential
refinancing. Lozano entered into a second term sheet with
Endeavor, pursuant to which Citadel entered into a new
mortgage agreement (2014 mortgage) with another Endeavor
subsidiary as determined by Endeavor. This loan had a principal
of $384, 000 and was secured by a new first mortgage on the
property. Like the 2011 mortgage, the 2014 mortgage had a
six-month term, a fourteen percent interest rate, and was
subject to a six percent origination fee. The loan was used,
as the parties had agreed, to pay the outstanding principal
of the 2011 loan; however, no discharge of the 2011
mortgage was recorded at the registry of deeds.
defaulted on the 2014 mortgage and foreclosure proceedings
commenced. In May, 2015, the foreclosure sale
of the property was held. One of the Endeavor subsidiaries,
Endeavor High Yield Mortgage Fund, LLC (EHYMF), both
conducted the sale and submitted the winning bid of $475,
January, 2016, Citadel filed a verified amended complaint
against the Endeavor subsidiaries, seeking a declaratory
judgment that the foreclosure sale was void because the
Endeavor subsidiaries' failure to discharge the 2011
mortgage violated their duty to conduct the sale in good
faith and with reasonable diligence (declaratory judgment
count) . See U.S. Bank Natl. Assn. v.
Ibanez, 458 Mass. 637, 647 n.16 (2011). Citadel claimed
that because no discharge of the 2011 mortgage had been
recorded in the registry of deeds, the appearance of the
mortgage in the chain of title dissuaded otherwise interested
bidders from bidding on the property, thereby allowing EHYMF
to purchase the property for itself at a price that was lower
than its market value. In addition, the complaint sought
damages and reformation of the underlying mortgages on the
grounds that (a) the Endeavor subsidiaries violated G. L. c.
183, § 55; (b) both mortgages were unconscionable; (c)
the Endeavor subsidiaries were unjustly enriched; and (d) the
Endeavor subsidiaries violated G. L. c. 93A. Citadel moved,
pursuant to G. L. c. 184, § 15(b), for approval of a
memorandum of lis pendens to be recorded against the
property. Citadel argued that the declaratory judgment count
constituted a claim of right to title to real property. The
Endeavor subsidiaries opposed the motion and filed a motion
to dismiss all of the counts of the amended complaint. That