Mary Hersey v. WPB Partners LLC

2014 DNH 029

• Court: District Court, D. New Hampshire
• Decided: February 11, 2041
• Docket: 11-CV-207-SM
• Status: Published

Opinion

Mary Hersey v. WPB Partners LLC 11-CV-207-SM 2/11/41 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Mary Hersey, Plaintiff

v. Case No. ll-cv-207-SM Opinion No. 2014 DNH 029 WPB Partners, LLC, Defendant

O R D E R

Plaintiff, Mary Hersey ("Hersey"), brings this action

against WPB Partners, LLC ("WPB Partners"), which holds a

promissory note and mortgage on Hersey's undeveloped real estate.

Plaintiff's remaining claim alleges that WPB Partners violated

Massachusetts' usury law,1 entitling her to relief. WPB Partners

filed a counterclaim against Hersey for breach of contract, based

upon Hersey's failure to pay on the promissory note. At the

close of discovery, defendant filed motions seeking entry of

summary judgment in its favor on both claims. Those motions,

doc. nos. 52 and 53, are granted.

I. Standard of Review

When ruling on a motion for summary judgment, the court must

"view the entire record in the light most hospitable to the party

1 For simplicity's sake, the court will refer to WPB Partners and its predecessor. Investment Realty Funding, LLC, as "defendant" or "WPB Partners." opposing summary judgment, indulging all reasonable inferences in

that party's favor." Griggs-Ryan v. Smith, 904 F.2d 112, 115

(1st Cir. 1990). Summary judgment is appropriate when the record

reveals "no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law." Fed. R. Civ.

P . 56(a).

II. Plaintiff's Claim

With respect to Hersey's claim that WPB Partners charged an

effective interest rate exceeding the maximum allowed under

Massachusetts' usury statute, see Mass. Gen. Laws ch. 271, § 49,

there is no genuine factual dispute that, as allowed under the

statute, WPB Partners filed a timely notice with the

Massachusetts Attorney General's office of its intention to make

loans at interest rates that exceeded the statutory cap. Because

"notification to the Attorney General is an absolute defense to

the enforceability of" an otherwise usurious note, Cannarozzi v.

Fiumara, 371 F.3d 1, 6 (1st Cir. 2004), Hersey's claim fails.

See also In re Loucheschi LLC, 471 B.R. 777, 782 (Bankr. D. Mass.

2012) .

Contrary to Hersey's position, WPB Partners' notice was not

deficient. WPB Partners was not, as plaintiff asserts, reguired

to file a separate notice for plaintiff's specific loan. See

2 Cannarozzi, 371 F.3d at 5 (holding that transaction-specific

notice is not required, noting that "notification is valid for

two years for loan transactions during that period."). Nor was

the notice defective because it specified that defendant intended

to make commercial loans, but plaintiff's loan was residential,

not commercial. There is no serious dispute on this record,

however, that Hersey's loan was a business loan made for the

purpose of funding real estate development.

Summary judgment in favor of defendant on plaintiff's sole

remaining claim. Count II, is necessarily granted.

III. Defendant's Counterclaim

A. Liability

Hersey's only defense to defendant's breach of contract

counterclaim is that WPB Partners may not recover damages for

breach of contract because it has unclean hands. The argument is

rejected for two reasons.

First, WPB Partners seeks a legal remedy in the form of

liquidated damages. "[T]he unclean hands doctrine," however,

only "bar[s] equitable relief." Moulton-Garland v. Cabletron

Sys., Inc., 143 N.H. 540, 544 (1999) (emphasis is original). See

also Kearney v. Elias, 2008 WL 3502116, at *7 (D.N.H. Aug. 11,

3 2008) ("[A]t common law, . . . [the] 'unclean hands' defense is

available only against equitable relief, not claims for

damages.") Second, even if the unclean hands doctrine was

generally available as a defense to WPB Partners' breach of

contract claim, plaintiff has not demonstrated, on this record,

that WPB Partners' conduct was sufficiently egregious to warrant

the doctrine's application. See generally Precision Instrument

Mfg., Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806,

814 (1945) (the doctrine of unclean hands bars relief to a party

"tainted with inequitableness or bad faith"). See also Congress

Park Office Condos II, LLC v. First-Citizens Bank & Trust Co.,

105 So. 3d 602, 610 (Fla. Dist. C t . Ap p . 4th Dist. 2013) ("A

failure to comply with the material terms of a loan document may

be a breach of contract, and it may not be nice, but it does not

amount to unclean hands.").

B. Liquidated Damages

During the pretrial conference held on February 7, 2014, the

court disclosed its intention to grant defendant's motions for

summary judgment. Following a discussion with respect to the

existence of any material dispute related to calculating the

liquidated damages amount, the parties agreed that the amount of

$443,443.03, as of September 6, 2011 (a date contemporaneous with

the filing of the bankruptcy petition) would be appropriate.

4 That amount represents a calculation decidedly in plaintiff'' s

favor, and an amount based in substantial part on plaintiff's own

expert's opinion. By agreeing to entry of judgment in that

amount, less than it reasonably could expect, defendant

pragmatically recognized that the property's value is

substantially less than the judgment amount, and no useful

purpose would be served by the expenditure of additional time and

resources to arrive at a higher, more accurate, but unimportant

figure.

Conclusion

Defendant's motions for summary judgment, doc. nos. _52 and

53, are granted. Judgment is entered in favor of the defendant

on plaintiff's usury claim. Count II. Judgment is entered in

favor of defendant on its counterclaim for breach of contract,

and liquidated damages in the amount of $433,433.03, is awarded.

SO ORDERED.

/teven J/ McAuliffe nited States District Judge

February 11, 2014

cc: Raymond J. DiLucci, Esq. Richard K. McPartlin, Esq. Edmond J. Ford, Esq.