United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
J. Casper United States District Judge
Bank of America, N.A. (“BANA”) has filed this
lawsuit against Defendants Alan J. Bankart and Diane K.
Bankart (the “Bankarts”) and their company,
Barnes Hill, LLC (“Barnes”) (collectively, the
“Bankart Defendants”), in connection with
BANA's interest in a line of credit agreement entered in
2000 and secured by a mortgage on the Bankarts' property.
D. 50. BANA also seeks a declaration that, among other
things, BANA's mortgage takes priority over any interest
that JPMorgan Chase Bank, N.A. (“Chase”) may have
arising from the later 2006 refinancing agreement with the
Bankarts. Id. Chase and the Bankart Defendants, in
turn, filed counterclaims against BANA and crossclaims
against one another. D. 52; D. 67; D. 68. BANA has moved for
partial summary judgment on Chase's counterclaims, D.
134, and BANA's claims and counterclaim against the
Bankart Defendants, D. 39; D. 133. The Bankart Defendants filed
a motion for summary judgment with respect to their
counterclaims against BANA. D. 139. Finally, Chase has moved
for summary judgment on its counterclaims and an affirmative
defense against BANA. D. 135. For the reasons stated below,
the Court DENIES BANA's motion for summary judgment
against Chase, D. 134, and ALLOWS IN PART and DENIES IN PART
as moot Chase's motion for summary judgment against BANA,
D. 135. The Court DENIES the Bankart Defendants' motion,
D. 139, and ALLOWS BANA's motions against the Bankart
Defendants, D. 39; D. 133.
Standard of Review
Court grants summary judgment where there is no genuine
dispute as to any material fact and the undisputed facts
demonstrate that the moving party is entitled to judgment as
a matter of law. Fed.R.Civ.P. 56(a). “A fact is
material if it carries with it the potential to affect the
outcome of the suit under the applicable law.”
Santiago-Ramos v. Centennial P.R. Wireless Corp.,
217 F.3d 46, 52 (1st Cir. 2000) (quoting Sánchez
v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)). The
movant “bears the burden of demonstrating the absence
of a genuine issue of material fact.” Carmona v.
Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If
the movant meets its burden, the non-moving party may not
rest merely on the allegations or denials in her pleadings,
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986), but “must, with respect to each issue on which
she would bear the burden of proof at trial, demonstrate that
a trier of fact could reasonably resolve that issue in her
favor, ” Borges ex rel. S.M.B.W. v.
Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). “As
a general rule, that requires the production of evidence that
is ‘significant[ly] probative.'” Id.
(alteration in original) (quoting Anderson, 477 U.S.
at 249). The Court “view[s] the record in the light
most favorable to the nonmovant, drawing reasonable
inferences in his favor.” Noonan v. Staples,
Inc., 556 F.3d 20, 25 (1st Cir. 2009). “When
deciding cross-motions for summary judgment, the court must
consider each motion separately, drawing inferences against
each movant in turn.” Reich v. John Alden Life Ins.
Co., 126 F.3d 1, 6 (1st Cir. 1997).
relevant facts are drawn from the statements of material fact
and supporting documents and are undisputed unless noted
otherwise. On November 7, 1997, the Bankarts purchased a
property on Weetamo Road, Nantucket, Massachusetts (the
“Property”). D. 140 ¶ 1; D. 139-1; D. 145
¶ 1. In May 2000, the Bankarts transferred the Property
by quitclaim deed to Defendant Barnes, D. 140 ¶ 2; D.
139-2; D. 145 ¶ 2, a company owned by the Bankarts, D.
140 ¶ 4; D. 139-3 at 10-11; D. 145 ¶ 4. Shortly
thereafter, the Bankarts executed an agreement with Fleet
Bank in which they received a $4 million line of credit (the
“Fleet Line Agreement”). D. 40 at 2; D. 40-1 at
6-8; see D. 152 ¶ 4 (acknowledging that the
Bankarts received a “four million dollar credit
facility” from Fleet Bank). Prior to the institution of
this litigation, BANA was unable to locate the loan
origination file or the original Fleet Line Agreement. D. 40
at 4; D. 40-1 at 3. On August 8, 2018, however, BANA located
the original Fleet Line Agreement and invited the parties to
inspect the same. D. 147-1 at 1-7; D. 147-2 at 2, 6.
According to BANA, as of the time the original Agreement was
filed with the Court, the Bankarts had not responded to
BANA's offer to make it available for inspection. D. 147
at 2, 6.
Fleet Line Agreement, including the $4 million line of
credit, was secured by a mortgage on the Property. D. 40 at
2; D. 40-4 at 2 (indicating in document entitled “Fleet
Bank Open-End Mortgage” that the line of credit at
issue was secured by a mortgage on a property at “1
Weetamo Rd, Nantucket, MA 02554”). The Bankarts deny
that the Fleet Line Agreement was secured by a mortgage on
the Property, D. 152 ¶ 6, but do not otherwise dispute
the authenticity of the mortgage document, D. 152 ¶ 8.
The Bankarts signed the mortgage on behalf of Barnes, which
is listed as the “mortgagor/borrower.” D. 40-4 at
6; see D. 40 at 2; D. 152 ¶ 7. The mortgage was
recorded on April 26, 2002. D. 40-4 at 2.
asserts that it merged with Fleet Bank on or about March 8,
2004, D. 40 at 3; D. 40-5, and, thus, BANA inherited the
Bankarts' mortgage (“BANA Mortgage”).
Following the merger, the Bankarts issued repayments pursuant
to the Fleet Line Agreement to BANA. D. 40 at 3; D. 40-2 at
38-39 (acknowledging receipt of monthly statements from Bank
of America “from when [the Bankarts] first re-drew the
line [of credit] down starting in 2006 through 2014”);
D. 152 ¶ 11. At some point in or around 2014, the
Bankarts ceased making payments to BANA. D. 40 at 3; D. 40-2
at 39; D. 152 ¶ 12. Although the Bankarts acknowledge
that “they owe [BANA] approximately $4 million, ”
they “dispute . . . whether their obligations to pay
this debt is subject to the Fleet Line Agreement or whether
the Fleet Line Agreement is enforceable.” D. 152 ¶
November 7, 2005, Alan Bankart informed Washington Mutual
(“WaMu”) that he intended to refinance the
Property to pay off a “home equity line” with
BANA. D. 154 ¶ 10; D. 154-1 at 46; D. 157 ¶ 10.
Shortly thereafter, WaMu sent the Bankarts a commitment
letter indicating that WaMu had approved their application
for a residential mortgage loan secured by the Property. D.
134 at 3; 134-6 at 2. The commitment letter also states that
WaMu shall have “no obligation [pursuant to the pending
mortgage agreement] unless all the foregoing conditions have
been satisfied in full, all required documents are signed,
and funds actually disbursed on or prior to December 14,
2005.” D. 134-6 at 2. One of the conditions required
the Bankarts to provide evidence that their BANA debt was
“paid in full at closing and security interest
released.” Id. at 3. A similar commitment
letter, dated January 17, 2006, reiterated this condition. D.
154 ¶ 12; D. 134-7 at 2; D. 157 ¶ 12. According to
Chase, as part of the refinancing process, BANA sent WaMu a
payoff statement identifying the Bankarts' outstanding
balance and the Bankarts' executed loan modification
agreement, which requested that BANA block and close their
line of credit upon receipt of payment in full. See
D. 154 ¶ 13 (stating that BANA sent WaMu a copy of the
Bankarts' payoff statement); D. 154 ¶¶ 24-25
(stating that BANA sent WaMu a copy of the Bankarts'
executed modification agreement, which instructs BANA to
block the Bankarts' account and close it when the
outstanding balance is paid to zero). BANA denies sending
these documents to WaMu. D. 157 ¶¶ 13, 24-25.
about January 19, 2006, Barnes and WaMu executed a promissory
note in the amount of $5 million secured by a mortgage on the
Property. D. 154 ¶ 16; D. 154-1 at 64-89; D. 157 ¶
16. The Bankarts signed the promissory note on behalf of
Barnes. D. 154-1 at 80. That same day WaMu generated lender
closing instructions, advising the Bankarts' settlement
agent, Glidden & Glidden, P.C., that it was not
authorized to disburse the proceeds from the pending
agreement until the Property was cleared of “all liens
and encumbrances to ensure that the Lender holds a valid
first lien position.” D. 134 at 5; D. 134-8 at 3. On or
around January 20, 2006, the Bankarts executed a request to
terminate their BANA line of credit, which had a payoff
balance of over $4 million. D. 154 ¶ 18; D. 154-1 at
91-92; D. 157 ¶ 18. As part of the termination process,
the Bankarts requested that BANA block and close their line
of credit account from further use “immediately”
and terminate the same upon receipt of payoff. D. 154 ¶
19; D. 154-1 at 96; D. 157 ¶ 19. Chase alleges, and BANA
disputes, that BANA sent the Bankart's request for
termination to Chase. D. 154 ¶ 21; D. 157 ¶ 21.
WaMu mortgage was recorded on January 25, 2006. D. 154 ¶
27; D. 157 ¶ 27. That same day, WaMu wired $4, 013,
649.24 to BANA. D. 154 ¶ 28; D. 157 ¶ 28. At the
time, WaMu understood that its mortgage on the Property was
in “first position, ” D. 134-5 at 17 (confirming
that WaMu believed “the title [to the Property] cleared
of all liens and encumbrances such that Washington Mutual
held the first lien position . . . since [WaMu] had just paid
off $4 million to Bank of America”), but took no
affirmative action with BANA or the Bankarts to confirm the
same, D. 144-1 at 14-15 (stating there was no indication from
WaMu's files that it took steps to confirm that BANA
discharged a mortgage on the Property).
WaMu overpaid on the outstanding balance, BANA provided a
refund of slightly more than $3000 to the Bankarts on
February 2, 2006. D. 154 ¶ 33; D. 142-3 at 15; D. 157
¶ 33. Per BANA's policy, a block should have been
placed on the Bankart's' account upon receipt of the
refund, which zeroed the balance of the line of credit. D.
154 ¶ 34; D. 154-1 at 58 (explaining that “the
block should have been placed on [the account] at that
time” but “[u]nfortunately, it wasn't done
timely”); D. 157 ¶ 34. BANA, however, did not
close or block the account. D. 154 ¶ 34; D. 154-1 at 58;
D. 157 ¶ 34. On February 15, 2006, the Bankarts began to
withdraw funds from the line of credit. D. 154 ¶ 35; D.
142-3 at 15; D. 157 ¶ 35. Because the Bankarts utilized
the line of credit prior to BANA closing the account, BANA
was unable to block the account and discharge the BANA
Mortgage. D. 154 ¶ 38; D. 154-1 at 58; D. 157 ¶ 38.
The Bankarts eventually withdrew $4 million, including the
sum recently paid off by Chase, on the line of credit. D. 154
¶ 41; D. 142-3 at 15-19; 157 ¶ 41.
the dissolution of WaMu in September 2008, the WaMu Mortgage
was assigned to Chase. D. 154 ¶ 44; D. 154-1 at 107; D.
157 ¶ 45. The Bankarts ceased making payments after
November 2012. D. 134 at 7; D. 134-5 at 27. Between 2012 and
2016, Chase delayed initiating foreclosure proceedings as
part of its loss mitigation effort with the Bankarts. D.
134-5 at 30. On or about August 29, 2016, during initial
foreclosure proceedings on the Bankarts' Property, Chase
learned from BANA that BANA had not blocked the Bankarts'
line of credit account following the January 2006 refinance.
D. 154 ¶ 51; D. 157 ¶ 51; see D. 134-5 at
34 (explaining that Chase learned the BANA mortgage continued