The opinion
STATE OF MAINE ©
PISCATAQUIS, SS.
4 SUPERIOR COURT
Docket No. RE-98-008
AMmM-Pis- 3/7 )oee’
MAINE STATE HOUSING
AUTHORITY,
Plaintiff, es
_
DECISION AND ORDER
v.
TITLE TO REAL ESTATE INVOLVED
RIVERVIEW APARTMENTS
LIMITED PARTNERSHIP,
Defendant.
Nee ee ee ee ee ee ee
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This matter is before the Court on Plaintiff's Motion for Summary Judgment.
For the following reasons, the Court GRANTS Plaintiff’s motion.
FACTS
This action stems from a promissory note, which Defendant, as the owner of
the Riverview Apartments development located in Dover-Foxcroft, executed on
April 6, 1977, to Northern National Bank. As security for the note, Defendant
executed a mortgage and security agreement covering Defendant's real and personal
property. The Bank subsequently assigned the mortgage and the note to Plaintiff,
the Maine State Housing Authority. -
As a precondition to the assignment, Plaintiff and Defendant entered into a
Regulatory Agreement, which provides for the regulation of the apartment
development by the Housing Authority. The Agreement requires Defendant to
provide management that is acceptable to Plaintiff and that conforms to the
standards set forth in the Agreement. The Agreement also provides that if
Defendant violates the Agreement, Plaintiff may give written notice of the violation
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to Defendant and allow 30 days or more to correct the problem. If Defendant does
not cure the violation within the time period designated in the notice, Plaintiff may
declare a default and may choose to take a number of actions, including foreclosure
of the mortgage, collection of rents and charges, possession of the development, and
any other actions necessary to preserve and operate the development, such as
retention of a new property manager and relief in the courts. In addition, a default
under the mortgage constitutes a default under the note and allows Plaintiff to
accelerate repayment of the note.
On January 3, 1994, Defendant hired Aaron Gleich, Inc., (“AGI”) a corporation
owned by Defendant’s general partner, to manage the development. In 1996,
Plaintiff became dissatisfied with AGI’s management of the development. By a
letter dated April 12, 1996, Plaintiff informed Defendant that the annual
management review conducted by Plaintiff on January 11, 1996, and February 29,
1996, revealed that the management and operation of the Riverview Apartments
development during 1995 was unsatisfactory. Plaintiff requested Defendant to
respond within 30 days to each of the unsatisfactory areas, as outlined in detail in
the letter. By a letter dated April 24, 1996, Plaintiff directed Defendant to contract
with an experienced property management company as a consultant for the
development no later than May 6, 1996, in order to rectify the numerous
management inadequacies. Defendant’s general partner Aaron Gleich took no
action because he disagreed with Plaintiff’s assertions of unsatisfactory management.
After receiving no response to the earlier correspondence, Plaintiff notified
Defendant by letter dated September 3, 1996, of Defendant’s violation of the
Regulatory Agreement due to inadequate management and instructed Defendant to
correct the violation within 30 days to avoid default under the agreement.
Defendant again took no action. Plaintiff next notified Defendant by letter dated
March 12, 1997, that Defendant had failed to submit its 1996 Annual Financial
Report due February 28, 1997. Plaintiff requested that Defendant submit the report
within 30 days. By letter dated April 1, 1997, Plaintiff notified Defendant of a default
under the Regulatory Agreement and under the mortgage because of Defendant’s
failure to cure the management problems. Plaintiff stated its intent to take over
possession and management of the property, and to receive all income, rents, and
operational accounts. As of that date, April 1, 1997, Plaintiff did in fact take over
possession and management of the property.
Plaintiff sent to Defendant an additional written notice of default dated April
13, 1998, which identified numerous additional defaults, including AGI’s failure to
hire and maintain qualified staff, AGI’s failure to establish and maintain adequate
systems, policies and procedures to manage the development, AGI’s failure to
submit records and reports to Plaintiff, and Defendant’s encumbrance of the
development with an additional mortgage and security agreement.
Plaintiff filed the present action, seeking foreclosure of the mortgage on the
Riverview Apartments property and collection on the promissory note. Plaintiff
seeks summary judgment on both claims and requests recovery for the balance of
the note, $329,938.33 as of April 1, 1999, and a foreclosure and sale of the property for
damages to the Reserve Fund for Replacements, costs associated with managing the
property since April 1, 1997, and litigation costs.
DISCUSSION
A party is entitled to summary judgment if no genuine issue of material fact
exists and the moving party is entitled to a judgment as a matter of law. See Burke
v. Port Resort Realty Corp., 714 A.2d 837, 839 (Me. 1998). Summary judgment is
intended to permit prompt disposition of cases in which dispute is solely dependent
on the resolution of an issue of law. See Berard v. McKinnis, 699 A.2d 1148, 1153
(Me. 1997). A party opposing a motion for summary judgment may not rest upon
mere allegations or denials; the party must respond by affidavits or otherwise by
producing evidence that shows there is a genuine issue for trial and by submitting a
separate statement of disputed material facts supported by appropriate references to
the record. See M.R.Civ.P. 56(e), 7(d).
Summary judgment is proper because Plaintiff has established that Defendant
violated the Regulatory Agreement, thereby defaulting under the mortgage and the
note. Plaintiff asserted in its statement of material facts that Defendant had
committed a lengthy list of violations under the Regulatory Agreement that
resulted in defaults under the note and mortgage. Plaintiff supported these
assertions with an affidavit of one of its employees and copies of correspondence
sent by Plaintiff to Defendant. Because Defendant’s Rule 7(d) submission failed to
“controvert specific paragraphs in the [plaintiff’s] statement of material facts,”
Plaintiff's facts are deemed admitted. Prescott v. State Tax Assessor, 721 A.2d 169, 172
(Me. 1998). The Court considers any additional material facts contained in
Defendant’s statement. See id.
Defendant did not deny the specific facts regarding inadequate management
asserted by Plaintiff but, rather, denied the violation and default generally. A
blanket denial by Defendant of specific facts, which standing alone establish liability,
is ineffective to withstand summary judgment for Plaintiff. See Farrell v. Theriault,
464 A.2d 188, 193 (Me. 1983). Farrell requires that, to demonstrate a genuine issue of
material fact, Defendant must specifically deny Plaintiffs factual allegations asserted
in support of summary judgment. Defendant's failure to refute Plaintiff’s detailed
factual allegations that clearly establish a default under the mortgage and under the
note for unacceptable management of the development entitle Plaintiff to judgment
as a matter of law. The Law Court recently affirmed a Superior Court decision based
on similar reasoning and an almost identical fact pattern between essentially the
same two parties. See MSHA v. Calais Elderly Apts., No. 99-552 (Me. Mar. 9, 2000).
The affidavits of Aaron Gleich, as the owner of AGI and general partner of
Riverview Apartments who is the primary individual overseeing the development,
clearly demonstrates his belief that AGI provided adequate management to the
Riverview Apartments; however, it is Plaintiff, not Mr. Gleich, who has the
authority to determine what constitutes acceptable management. Paragraph 3 of the
Regulatory Agreement provides that Defendant “shall provide for the management
of the Development in a manner acceptable to [Plaintiff].” Plaintiff provided
Defendant with sufficient notice of Plaintiff’s dissatisfaction with Defendant’s
management of the development, and Defendant declined to take any action to
remedy the problems. According to Aaron Gleich’s affidavit, his only action was to
instruct his attorney to respond to the alleged defaults, after receipt of Plaintiff’s
April 1, 1997, letter and after Plaintiff took possession of the property. In addition,
Defendant’s denial of defaults that occurred subsequent to Plaintiff’s take over of
possession of the property is insufficient to withstand summary judgment because
the violation due to inadequate management alone establishes default.
The docket entry is:
Motion for summary judgment GRANTED. Judgment entered for Plaintiff.
Diet: BV ] Loses
Hon Andrew Mead
CHIEF JUSTICE, SUPERIOR COURT