BEAU GRASSIA & Others v. DEAN BANK (And a Companion Case).

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule
1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to
the parties and, therefore, may not fully address the facts of the case or the
panel's decisional rationale. Moreover, such decisions are not circulated to
the entire court and, therefore, represent only the views of the panel that
decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued
after February 25, 2008, may be cited for its persuasive value but, because of
the limitations noted above, not as binding precedent. See Chace v. Curran, 71
Mass. App. Ct. 258, 260 n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

24-P-57
24-P-58

BEAU GRASSIA & others1

vs.

DEAN BANK (and a companion case2).

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

These two appeals involve the same cases (consolidated

below) and issues. The appellant in No. 24-P-58 is Janis

Spencer, trustee of the Main Street Millis Realty Trust, who is

the owner of the property at 39 Main Street, Millis,

Massachusetts, which is the location of the King Street Café on

the Charles restaurant. The appellants in the other appeal, No.

24-P-57, are the restaurant and its president. The facts of the

1 Caridi Brothers King Street Co., Inc., and King Street
Café on the Charles, Inc.

2 Janis Spencer, as Trustee of Main Street Millis Realty
Trust, vs. Dean Bank.
cases are well known to the parties and will not be repeated

here, except as necessary.

Facts. Spencer, as trustee, is a party to a commercial

mortgage (the mortgage) on the land with buildings thereon known

and numbered as 39 Main Street, Millis, Massachusetts, which is

given to the appellee in both cases, Dean Bank, the mortgagee,

as collateral to secure her obligations under the mortgage. She

is also party to a $200,000 mortgage note (the Note) in favor of

the mortgagee bank. Grassia is a guarantor of the trust's debt.

On the date of the mortgage closing, the bank did not

disburse the entire $200,000 to the borrower. Rather, it used a

portion of the loan to pay off a prior mortgage it held on the

property -- the propriety of which payment is not at issue

here -- and it disbursed to the plaintiffs $65,000 additional

dollars. This left an additional $73,273.98 borrowed under the

terms of the Note that was not disbursed to the borrower.

The bank insisted, and argues here, that it was not

required to disburse these funds to the borrower because this

was a "construction loan" within the meaning of a commitment

letter signed by the borrower. The bank argues this

construction loan requires that the borrower request a

disbursement and allow the bank to inspect completed projects

before the bank is required to disburse funds to cover the costs

of construction.

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The Note called for payments of interest and principal on

the entire $200,000 balance, despite the fact that this

additional amount was not disbursed, and over the next roughly

year and a half, the bank asserted that the procedures it claims

were required prior to disbursement had not been followed,

except with respect to $7,000 that the bank disbursed for

insulation. The borrower insisted it could not comply with the

request made by the bank because Grassia had already depleted

his own funds paying for work performed before the loan closed

and the plaintiffs needed the money to move forward with the

project.

Eventually, the plaintiffs brought these suits, which were

consolidated, based on the failure to disburse these monies,

alleging breach of contract, fraudulent inducement, and a

violation of G. L. c. 93A. The bank brought a motion for

summary judgment in each suit, arguing that it was entitled to

judgment on all these counts and on its declaratory relief

counterclaim and for attorney's fees.

The judge allowed the motions, and entered summary

judgments on the entire case, including the G. L. c. 93A claim,

presumably because, in the absence of either a breach of

contract or fraudulent inducement to enter the contract, there

was no basis for a G. L. c. 93A claim. The plaintiffs also

brought a cross motion for summary judgment on their claims and

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the bank's counterclaim, which was denied. After issuing his

summary judgment decision, the judge ordered the plaintiffs to

pay the bank's attorney's fees. The plaintiffs have now

appealed.

Discussion. We review allowance of a motion for summary

judgment de novo. Galenski v. Erving, 471 Mass. 305, 307

(2015). Where, as here, we review a decision on cross motions

for summary judgment, we must determine whether, viewing the

facts in the summary judgment record and all reasonable

inferences that can be drawn therefrom "in the light most

favorable to the party against whom the judge allowed summary

judgment," Marhefka v. Zoning Bd. of Appeals of Sutton, 79 Mass.

App. Ct. 515, 516 (2011), there is no genuine issue of material

fact, and the moving party is entitled to judgment as a matter

of law. Matter of the Estate of Jablonski, 492 Mass. 687, 690

(2023).

The bank insists that this is a construction loan, but the

various documents in the record do not bear this out. The Note

itself says nothing about this being a construction loan, and

for aught that appears, it is an ordinary mortgage on the real

property identified in the mortgage, securing a $200,000 loan.

The bank, however, points to a commitment letter, dated May

22, 2018. This letter outlines certain terms of the proposed

loan, including the bank's security interest in the property,

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the interest rate, and repayment schedule. Paragraph 29 of this

letter, the bank argues, controls disbursement of the $200,000

owed under the Note by borrower and on which the borrower was

required immediately to begin paying interest. The commitment

letter states that, "It is expressly understood and agreed that

the terms, conditions, requirements and obligations of this

commitment shall survive the closing date hereto and remain in

full force and effect after the closing of the Loan."

To begin with, the commitment letter is not made part of

the Note itself. Rather, in the Note, in paragraph 8 -- "Events

of Default," which includes a laundry list of events identified

as "an event of default" under the Note -- subparagraph (e)

reads:

"failure by Borrower to comply with any other term of, or
the occurrence of a default under, this Note, or the
failure by the Borrower or any Guarantor to comply with the
terms of, or the occurrence of a default under, any
mortgage, guaranty, loan or security agreement or other
agreement or document which may now or hereafter evidence,
govern or secure this Note or any guaranty or endorsement
of this Note; failure by the Borrower or any Guarantor to
comply with the terms of or conditions of the Commitment
Letter dated May 22, 2018."

The bank has not claimed any default by the plaintiffs for

failure to comply with any term of the commitment letter, and,

indeed, have never asserted that there has been an event of

default. Because the Note does not say that the commitment

letter contains, or that the Note incorporates, any terms

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relevant to the requirements for disbursement by the bank, the

letter is irrelevant to this matter. The Note controls and not

the commitment letter or its implications. As the Note does not

say anything about conditions that must be met prior to

disbursement, this suffices to resolve the case.

Even if we were to assume, however, that the commitment

letter did create binding terms of the loan with respect to

disbursement, it would be of no benefit to the bank. Some of

the provisions of the commitment letter, which contains a great

deal of boilerplate, are operative only if applicable to the

circumstances of the loan. Thus, for example, paragraph 26,

about soil tests, says, "If applicable, the receipt by the Bank

of a satisfactory soil test" is a condition of the loan.

Paragraph 28 says, "If applicable, the Bank's obligation to make

this loan to you is conditional upon its receipt of a conformed

copy of the Subsurface Sewerage Disposal System Inspection

Form."

The next paragraph, paragraph 29, reads in full:

"A construction loan agreement will set forth the usual
terms and conditions and will stipulate that the unadvanced
proceeds will, at all times, be in an amount which, in the
Bank's opinion, will be sufficient to complete construction
in accordance with the plans and specifications submitted
to the Bank.

"Construction advances will be made upon the receipt of a
standard requisition submitted by the Borrower. Each
construction advance will be subject to inspection and
approval by a Bank approved Construction Consultant. The

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cost of the inspections shall be borne by the Borrower.
Prior to each advance, the Bank, at its discretion, may
require evidence from its Counsel as to the continued
priority of its first mortgage lien. Cost is to be paid
prior to final disbursement. Proceeds of the loan will be
credited to your Dean Co-operative Bank checking account on
the basis of the schedule which is part of the construction
loan agreement.

"After completion of the foundation, the Borrower shall
provide to the bank a survey by a registered engineer
certifying that the building complies with the provisions
of existing setback requirements and any other applicable
zoning regulations. In addition, the well (if needed) and
septic system must both be installed and have reviewed
[sic] necessary approvals from the applicable boards."

The bank relies on this language in arguing that the funds

may not be disbursed without a requisition, inspection, and

approval by the bank. This is why the bank claims it did not

need to disburse additional funds to the plaintiffs.

But this provision only applies if the loan is a

"construction loan agreement." There is no such agreement in

this case. The first paragraph quoted above indicates how to

identify the construction loan agreements to which paragraph 29

applies: such agreements "will set forth the usual terms and

conditions and will stipulate that the unadvanced proceeds will,

at all times, be in an amount which, in the Bank's opinion, will

be sufficient to complete construction in accordance with the

plans and specifications submitted to the Bank." Counsel, at

argument, could not point to a construction loan agreement in

the record and did not represent that one existed. There is

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certainly no loan agreement "set[ting] forth the usual terms and

conditions" or stipulating that unadvanced proceeds shall be in

any amount at all. There is no schedule, which paragraph 29

identifies as one part of a construction loan agreement, that

might have provided information, if this were a construction

loan, about what the projected costs were for each piece of

work, so that one might determine what amount should be withheld

in the first place.

There is, in fact, no document indicating why the amount

chosen by the bank to withhold from disbursement was chosen.

There are no plans or specifications submitted to the bank from

which one might deduce this. The record does indicate that some

cost estimates were, at some point prior to the commitment

letter, sent to the bank by Grassia. But these are certainly

not plans or specifications. They are littered with question

marks next to amounts. They do not indicate anything about

either $65,000 or $73,000 being amounts of any relevance, and,

in any event, the commitment letter itself says no documents

prior to its signing have further relevance.

The plaintiffs also argue that on one signed copy of the

commitment letter, the letters "NA," presumably standing for

"not applicable," are written in next to paragraph 29, and that

the initials for the counsel for the bank are beneath them.

Perhaps there is a dispute about whether those are counsel's

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initials or what the meaning of this is. But it makes no

difference because it cannot raise an issue of material fact:

paragraph 29, by its terms, is not applicable to this loan.

The bank argues that even if paragraph 29 is not

applicable, it was still entitled to withhold the funds it did

not disburse and require the steps of requisition, inspection,

and approval before disbursing additional funds under the next

paragraph of the commitment letter, paragraph 30. That

provision is entitled "Other Conditions." These are:

"1. Primary Deposit Account for Main Street Millis
Realty Trust, Caridi Brothers King Street Co., Inc., King
Street Café on the Charles, Inc. and Beau Grassia be
maintained with Dean Bank.

"2. Funds for construction and improvements to be
held in a passbook account until work completed and be
inspected for advances.

"3. Updated Personal Financial Statement."

The bank would rely on condition 2. This condition,

however, can only be read in conjunction with paragraph 29.

Standing alone, it is plainly inadequate to set up the system

the bank alleges was in place and that was actually articulated

in paragraph 29. It contains none of the terms and conditions

one might need for a construction loan. It provides for no

schedule that might indicate what funds are to be withheld and

how, and for what amounts might be advanced.

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In short, on its face paragraph 30 cannot, standing alone

and in the absence of an actual construction loan agreement,

have been intended to authorize the retention of funds by the

bank and their disbursement for construction. It provides no

mechanism for determining what the amount to be withheld at

closing is supposed to be.

Because the bank did not enter into a construction loan

agreement with the borrower, and because there was no agreement

between them concerning the withholding of some of the $200,000

loan or stating that certain of the loan proceeds would not be

disbursed absent requisition, inspection, and approval of

construction, the bank's motion for summary judgment on the

breach of contract claim should not have been allowed. Rather,

the plaintiffs' cross motion should have been allowed.

Because the plaintiffs were correct about the meaning of

the contract, their claim that they were fraudulently induced

into some other type of agreement must fail, and therefore the

judgment on the fraudulent inducement claim was properly entered

for the bank.

Because neither party made any separate arguments on the

G. L. c. 93A claim below, relying on their positions on the

other claims, and because the judge did not separately address

this claim, and in light of the judgment that must be ordered

against the bank on the breach of contract claim, the case must

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be remanded for a calculation of damages due to the breach, and

for further proceedings on the plaintiffs' claim under G. L.

c. 93A, about which we express no opinion.

So much of the summary judgments as entered in favor of the

bank on the plaintiffs' breach of contract claims are reversed,

as is the order awarding attorney's fees to the bank, and

judgment shall enter for the plaintiffs on those claims. So

much of the summary judgments as dismissed the plaintiffs' G. L.

c. 93A claims are vacated. In all other respects the summary

judgments are affirmed. The case is remanded for calculation of

damages on the plaintiffs' breach of contract claims, any award

of attorney's fees that may be appropriate, should they be

sought, and such further proceedings with respect to the claims

under G. L. c. 93A as are consistent with this memorandum and

order. The bank's request for an award of its appellate

attorney's fees is denied.

So ordered.

By the Court (Rubin,
D'Angelo & Smyth, JJ.3),

Clerk

Entered: June 20, 2025.

3 The panelists are listed in order of seniority.

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