States Resources Corp. v. the Architectural Team, Inc.

United States Court of Appeals
For the First Circuit
No. 05-1381
STATES RESOURCES CORP.,
Plaintiff, Appellee,
v.
THE ARCHITECTURAL TEAM, INC.,
Defendant, Appellant,
MICHAEL CAPIZZI; CATHERINE CAPIZZI; GARRETT, INC.,
Defendants, Appellees,
JOHN CONNOLLY, JR.; MASSACHUSETTS DEPARTMENT OF REVENUE;
JAMES GRUMBACH; KEVIN DUFFY,
Defendants.
No. 05-1473
STATES RESOURCES CORP.,
Plaintiff, Appellant,
v.
MICHAEL J. CAPIZZI; CATHERINE R. CAPIZZI;
THE ARCHITECTURAL TEAM, INC.;
GARRETT, INC.; JOHN CONNOLLY JR.;
MASSACHUSETTS DEPARTMENT OF REVENUE; KEVIN DUFFY,
Defendants, Appellees,
JAMES GRUMBACH,
Defendant.

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Of the District of Maine, sitting by designation. *
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lipez, Circuit Judge,
Coffin, Senior Circuit Judge,
and Carter, Senior District Judge. *
Jordan Ring, with whom Ring Law Firms was on brief, for
appellant/cross-appellee.
John A. Doonan, with whom is Doonan, Graves & Longoria,
L.L.C. was on brief, for appellee/cross-appellant.
December 20, 2005

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LIPEZ, Circuit Judge. This case began as an interpleader
action to determine the proper distribution of surplus proceeds
from a foreclosure sale conducted by States Resources Corporation
("SRC"). To that end, SRC named several defendants with interests
in the foreclosed property, including The Architectural Team, Inc.
("TAT"), a junior lienholder. TAT filed counterclaims against SRC,
alleging that SRC mishandled the foreclosure sale and breached its
fiduciary duty to TAT. The district court granted summary judgment
in favor of SRC, denied a motion by TAT to add a counterclaim, and
denied a motion by SRC to strike portions of an affidavit filed by
TAT. Both parties appealed. We affirm.
I.
This case has a complex factual and procedural history
that is discussed in detail in the district court's opinion. See
States Res. Corp. v. Capizzi, No. 04-10095, 2005 U.S. Dist. LEXIS
956 (D. Mass. Jan. 20, 2005). We relate only those facts relevant
to the questions presented on appeal.
A. States Resources Corporation's Interest in the Capizzi Property
In October 1988, Michael Capizzi ("Capizzi") signed a
$750,000 adjustable-rate note, secured by a $750,000 mortgage on
his property at 236 Lincoln Road, Lincoln, MA, memorializing a loan
from Winchendon Savings Bank ("WSB") for use in developing his
property. After WSB became insolvent, other institutions obtained
and assigned the mortgage until SRC became the mortgagee in 1998.

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SRC first initiated foreclosure proceedings against
Capizzi in state court in January 1999, alleging that he was in
default on the note. Due to a series of partial payments and
defaults by Capizzi and his wife, Catherine Capizzi, SRC cancelled
and recommenced foreclosure proceedings against Capizzi several
times. The Capizzis filed several lawsuits against SRC and
bankruptcy petitions to prevent the foreclosure, none of which was
successful. During the course of a state court action filed by the
Capizzis against SRC, SRC removed the case to federal court based
on diversity jurisdiction. On June 9, 2003, the district court
granted a motion by SRC for default judgment against the Capizzis
for their failure to plead or otherwise defend against SRC's
counterclaims, and entered judgment in favor of SRC for
$875,203.38.
B. The Architectural Team, Inc.'s Interest in the Capizzi Property
In 1989, TAT filed a lawsuit against the Capizzis in
Suffolk Superior Court, regarding a dispute over unpaid fees. In
1994, TAT obtained and duly recorded a $600,000.00 attachment on
the Capizzi property. The lawsuit went to trial and the court
entered a judgment in favor of TAT for $200,254.00, with interest
accruing from the 1989 filing date. See The Architectural Team,
Inc. v. Capizzi, No. 89-4479-D, slip op. at 3-4 (Mass. Super. Feb.
26, 1999), aff'd,782 N.E.2d 1136 (Mass. App. Ct. 2003). On

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September 24, 2003, TAT obtained and recorded a $541,152.81
execution on its judgment from the court.
C. The Foreclosure Auctions and Disbursement of Proceeds
After obtaining its default judgment against the
Capizzis, SRC made plans to sell the property. SRC hired Garrett,
Inc. and its president, Garrett Healy, to conduct the foreclosure
auction proceedings.
At the first foreclosure auction, the highest bid of
$2,000,000.00 came from Linda Micu. Micu signed a "Memorandum of
Terms and Conditions for the Purchase at the Mortgagee's
Foreclosure Sale" as "Linda Micu or Assigns" and provided Garrett
with a $5,000.00 deposit. However, Micu, who turned out to be a
straw person for Catherine Capizzi, did not purchase the property
and forfeited her deposit. Micu left Garrett a phone message
stating that "we have had a little bump in the road here
financially and we are now having a problem getting financing...
but I would at least like to give you the courtesy to let you know
at this point we cannot proceed with this and hopefully you can get
this thing going and someone else can take advantage of what I
think is a pretty good deal."
After Micu's offer fell through, SRC scheduled a second
foreclosure auction for September 26, 2003. SRC published a
"Notice of Mortgagee's Sale of Real Estate," which contained a
legal description of the property, in The Concord Journal on

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September 4, 11, and 18, 2003. At the direction of SRC, Garrett
also publicized the auction through telemarketing, mailings, the
internet, and "display advertisements" in The Boston Globe on
September 14 and 21, 2003. The display advertisements contained
incorrect information, allegedly obtained from town records,
understating the acreage of the property and the number of
bedrooms, bathrooms, and fireplaces it contained.
In early August 2003, Garrett received a letter from
Leonard Florence, who offered to buy the property for $2,000,000.00
and provided a deposit of $50,000.00. Garrett informed counsel for
SRC of the offer and deposit. SRC's attorney later informed
Garrett that, based on his interpretation of state law, SRC could
not accept Florence's offer because it was made outside of the
public auction process. Garrett rejected Florence's offer and
asked him whether he would like to participate in the upcoming
auction. Florence declined, telling Garrett that he did not have
the time to pursue the property. Garrett returned the deposit to
Florence. Neither SRC nor Garrett informed any of the other
interest holders of the offer by Florence.
On September 26, 2003, Garrett conducted the second
foreclosure auction. Kevin Duffy made the highest bid of
$1,200,000.00. Duffy and Garrett executed a "Memorandum of Terms
and Conditions For the Purchase at Mortgagee's Foreclosure Sale,"

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which included a provision stating that TAT had a $600,000.00 real
estate lien on the property.
At the time of the final foreclosure auction of the
Capizzis' property, SRC was owed $932,630.87, which it collected
from the $1,200,000.00 proceeds. In November 2003, counsel for SRC
and TAT negotiated the disbursement of the surplus auction
proceeds. On November 11, 2003, SRC sent TAT a check for
$210,096.33 in partial satisfaction of TAT's junior lien. After
sending the check, SRC sent TAT an indemnification agreement
pursuant to which TAT would indemnify and hold harmless SRC "from
any and all actions, proceedings, claims, demands, costs, damages
and expenses . . . in connection with or arising out of the
payment." TAT never executed the indemnification agreement.
D. Procedural History
SRC initiated an interpleader action in federal district
court on January 15, 2004, seeking a judicial determination
regarding the proper apportionment of proceeds from the September
26, 2003 foreclosure sale of the Capizzis' property. Although
SRC's initial judgment against the Capizzis was satisfied by the
proceeds of the sale, SRC alleged that it had accrued additional
fees and costs due to the lawsuits filed by the Capizzis and the
payment owed to the auctioneer for his services. SRC named several
parties with interests in the proceeds as defendants, including
TAT. On March 17, 2004, TAT filed an answer; affirmative defenses;

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cross-claims against Catherine Capizzi; and counterclaims against
SRC, seeking an accounting and alleging unjust enrichment and
various other defects in foreclosure. On April 20, 2004, TAT filed
an amended answer, affirmative defenses, cross-claims, and
counterclaims. On July 8, 2004, TAT filed a motion to amend its
answer to add a counterclaim against SRC and Garrett under Mass.
Gen. Laws ch. 93A for unfair and deceptive business practices,
based on information regarding the Florence offer that TAT alleges
it first learned about through discovery. On October 6, 2004, SRC
filed a motion for partial summary judgment, which TAT opposed.
On January 20, 2005, the district court granted SRC's
motion for partial summary judgment and dismissed TAT's
counterclaims, denied TAT's motion to amend its answer to add a
counterclaim, and denied SRC's motion to strike portions of an
affidavit filed by TAT. Shortly thereafter, SRC filed a motion for
a final judgment, describing a proposed disbursement of the surplus
funds. On February 4, 2005, the district court issued the final
judgment, adopting SRC's disbursement proposal and ordering SRC to
disburse $48,459.20 to Garrett, Inc. for its auctioneer services
and $13,813.60 to SRC for costs and attorneys fees incurred in the
interpleader action and related bankruptcy litigation. TAT and SRC
appealed.

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II.
A. Subject Matter Jurisdiction
As a preliminary matter, we dispatch SRC's argument that
the district court lacks subject matter jurisdiction over some of
TAT's claims under the Rooker-Feldman doctrine. "Under the Rooker-
Feldman doctrine, federal district courts lack jurisdiction over
'federal complaints . . . [that] essentially invite[] federal
courts of first instance to review and reverse unfavorable state-
court judgments.'" Federación de Maestros de P.R. v. Junta de
Relaciones del Trabajo de P.R., 410 F.3d 17, 20 (1st Cir. 2005)
(quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 125 S. Ct.
1517, 1521 (2005)). SRC asserts that the district court does not
have subject matter jurisdiction over TAT's claims that SRC acted
in bad faith and without reasonable diligence in conducting the
foreclosure sale because a state court dismissed similar claims
made by the Capizzis in a suit the Capizzis filed against SRC.
Although TAT was not a party to that suit, SRC argues that TAT's
claims regarding the foreclosure sale are "inextricably
intertwined" with the issues adjudicated in the state court
proceedings and that granting relief to TAT would be effectively
holding that the state court was wrong in its decision.
SRC's argument is incorrect. The Supreme Court has
clarified the scope of the Rooker-Feldman doctrine:
The Rooker-Feldman doctrine . . . is confined to cases of
the kind from which the doctrine acquired its name: cases

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brought by state-court losers complaining of injuries
caused by state-court judgments rendered before the
district court proceedings commenced and inviting
district court review and rejection of those judgments.
Rooker-Feldman does not otherwise override or supplant
preclusion doctrine or augment the circumscribed
doctrines that allow federal courts to stay or dismiss
proceedings in deference to state-court actions.
Exxon Mobil Corp., 125 S. Ct. at 1521-22. SRC's argument thus
fails for two reasons. First, as noted, TAT was not a party to the
initial action. Therefore, TAT is not a "state-court loser[]
complaining of injuries caused by state-court judgments." Id.; see
also Valenti v. Mitchell, 962 F.2d 288, 297 (3d Cir. 1992) ("We
have found no authority which would extend the Rooker-Feldman
doctrine to persons not parties to the proceedings before the state
supreme court.").
Second, as we have recently stated, "[i]f federal
litigation is initiated before state proceedings have ended, then
-- even if the federal plaintiff expects to lose in state court and
hopes to win in federal court -- the litigation is parallel, and
the Rooker-Feldman doctrine does not deprive the court of
jurisdiction." Federación de Maestros de P.R., 410 F.3d at 24
(emphasis in original). In this case, SRC is relating TAT's claims
against it here to proceedings filed by the Capizzis in March 2004
in the Middlesex Superior Court. Since the state court action
referenced by SRC was not yet filed when SRC filed its federal
district court action in January 2004, and was still pending when
TAT answered with its counterclaims in March 2004, the Rooker-

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Feldman doctrine does not deprive the district court of subject
matter jurisdiction over those claims.
B. Motion for Summary Judgment
"We review a district court's grant of summary judgment
de novo, viewing the facts in the light most favorable to the
nonmovant." Hodgkins v. New England Telephone Co., 82 F.3d 1226,
1229 (1st Cir. 1996). Summary judgment is appropriate "if the
pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c). An issue is "genuine" if "the evidence is such that a
reasonable jury could resolve the point in favor of the nonmoving
party." NASCO, Inc. v. Public Storage, Inc., 29 F.3d 28, 32 (1st
Cir. 1994) (emphasis in original) (citation and internal quotation
marks omitted). A fact is "material" if it has 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). "We may affirm a summary judgment decision on any basis
apparent in the record." Uncle Henry's, Inc. v. Plaut Consulting
Co., 399 F.3d 33, 41 (1st Cir. 2005) (citing Fabiano v. Hopkins,
352 F.3d 447, 452 (1st Cir. 2003)).
TAT argues that the district court erred in granting
SRC's summary judgment motion and finding no genuine issue as to

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any material fact regarding SRC's compliance with its fiduciary
duties to TAT as a mortgagee conducting a foreclosure sale under
Massachusetts law. To support its breach of fiduciary duties
claim, TAT focuses on the district court's determinations regarding
the adequacy of notice and advertising of the property for sale,
the adequacy of the price obtained, and SRC's handling of the Micu
bid and Florence offer. We address each issue in turn.
1. Adequacy of Notice and Advertising
TAT argues that SRC violated its fiduciary duties under
Massachusetts law by publishing inaccurate "display advertisements"
in The Boston Globe. These advertisements understated the acreage
(listing two-and-a-half acres instead of six) and the number of
bedrooms, bathrooms, and fireplaces.
Statutory requirements for foreclosure proceedings are
governed by Mass. Gen. Laws ch. 183, § 21 (defining the "statutory
power of sale") and ch. 244, § 14 (governing notice of foreclosure
proceedings). As TAT concedes, SRC satisfied statutory notice
requirements by publishing timely notice in The Concord Journal,
and the statute does not require additional advertising or notice.
See Mass. Gen. Laws ch. 244, § 14.
Beyond compliance with statutory terms, however, a
mortgagee also owes a fiduciary duty to lienholders of the
property. "In executing the power of sale, the [mortgagee], in

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addition to a literal compliance with the terms of the power, [is]
bound to exercise good faith and to put forth reasonable diligence
to protect the interests of the mortgagor," Atlas Mortgage Co. v.
Tebaldi, 24 N.E.2d 554, 557 (Mass. 1939), or "those claiming in his
right, including those holding junior encumbrances or liens."
Sandler v. Silk, 198 N.E. 749, 751 (Mass. 1935). There may be
circumstances where a mortgagee's advertisement of inaccurate
information about a property is evidence of a lack of good faith or
reasonable diligence, even if those inaccuracies occurred in
notices beyond the minimal publication notice required by statute.
Cf. Deslauries v. Shea, 13 N.E.2d 932, 936 (Mass. 1938) ("A
mortgagee ordinarily is not required . . . to give notice of a
foreclosure sale other than by publication. But there may be
circumstances in which failure to give further notice is 'evidence
that good faith was not used to obtain the best reasonable possible
price.'") (citations omitted).
However, there is no evidence of bad faith of lack of
diligence here. SRC asserts that it obtained the inaccurate
information given to Garrett for the display advertisements from
Town of Lincoln records. TAT does not contest this assertion and
does not allege that SRC had an improper motive for the
inaccuracies. SRC was not the buyer of the property. No
allegations have been made that SRC was alerted to the inaccuracies
and refused to remedy them. As the district court concluded, "[i]f

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anything, the reasonable inference to be drawn from SRC's arranging
for [advertisements in The Boston Globe] was that it was attempting
to stir up interest among potential buyers of the Property and
thereby generate competitive bidding at the auction." States Res.
Corp., 2005 U.S. Dist. LEXIS 956, at *33. Therefore, SRC did not
violate any fiduciary duty it owed to TAT.
Without evidence of self-dealing, or evidence that SRC
might have a motive for undermining the foreclosure sale, or any
other showing of misconduct, there is no genuine issue of material
fact on this claim. See FDIC v. Elder Care Servs., 82 F.3d 524,
527 (1st Cir. 1996) ("Normally, a party suggesting fraud or bad
faith is expected to point to the misconduct (lies, rigged account
books, self-dealing by a fiduciary) that reflects the bad faith or
constitutes the fraud. True, on some occasions the inference of
fraud or bad faith might be compelled by the combination of motive
and outcome; but here motive is utterly lacking . . . .") (emphasis
in original).
2. Adequacy of Price Obtained
TAT emphasizes that the $1,200,000.00 price paid in the
second auction was 40% lower than the $2,000,000.00 bid offered
independently by Micu, who could not complete the sale, and by
Florence, who made his offer outside of the bidding process. TAT
argues that this "reduction" in price is evidence of SRC's lack of
reasonable diligence and good faith.

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Under Massachusetts law, "[a]bsent evidence of bad faith
or improper conduct . . . mere inadequacy of price will not
invalidate a sale unless it is so gross as to indicate bad faith or
lack of reasonable diligence." Resolution Trust Corp. v. Carr, 13
F.3d 425, 430 (1st Cir. 1993) (emphasis in original) (internal
quotations and citations omitted); see also Seppela & Aho Contr.
Co., Inc. v. Petersen, 367 N.E.2d 613, 620 (Mass. 1977) (finding
that a showing that foreclosure sale price was less than fair
market value was not enough to support any basis of liability).
Generally, to determine whether a sales price is grossly
inadequate, the price is compared with a fair market value
appraisal of the property. See Elder Care Servs., 83 F.3d at 528.
The $2,000,000.00 comparison figure stated by TAT is based on the
Micu bid and Florence offer and not on an appraisal of the fair
market value of the property. TAT has not offered any such
appraisal information. Even assuming a comparison of a previous
uncompleted bid and final sale price is appropriate, other courts
have found similarly-sized differences to be not "so gross" as to
indicate bad faith or a lack of reasonable diligence. See Elder
Care Servs., 83 F.3d at 528 (disparity between estimated
liquidation price of $2,000,000 and later sales price of $300,000
not so gross as to withstand summary judgment motion); Resolution
Trust Corp., 13 F.3d at 430 (disparity between appraisal price of
$350,000 and sales price of $195,000 not enough to withstand a

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summary judgment motion); Fairhaven Savings Bank v. Callahan, 462
N.E.2d 112, 114 (Mass. 1984) (purchase price of $10,000 on property
securing a $40,000 debt not so inadequate as to constitute a breach
of fiduciary duty as a matter of law); Sher v. South Shore Nat'l
Bank, 274 N.E.2d 792, 794 (Mass. 1971) (disparity between alleged
fair market value of $52,500 and sales price of $35,500 not so
gross as to withstand a motion to dismiss); Cambridge Sav. Bank v.
Cronin, 194 N.E. 289, 289-90 (Mass. 1936) (disparity between
alleged fair market value of $51,000 and sales price of $20,000
warranted direct verdict against the challenger of the sale).
3. SRC's Handling of the Micu Bid and Florence Offer
TAT argues that SRC violated its fiduciary duty by
failing to facilitate the transfer of Micu's interest to Florence
and failing to disclose the Florence offer to TAT. TAT alleges
that Micu expressed the desire to assign her contract rights to
another buyer through her phone message to Garrett and her
signature on the sales contract as "Linda Micu or Assigns". TAT
argues that, given SRC’s knowledge of Micu’s alleged desire to
assign, SRC should have assisted Micu in assigning her rights under
the sales contract to Florence, or, at the very least, told TAT of
Florence's offer.
We do not find any support in the record for TAT’s
contention that Micu expressed to SRC her desire to assign her
rights. The fact that Micu signed the contract “Linda Micu or

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Assigns” does not constitute a request that SRC help her assign her
rights to another party. Micu’s telephone message, rather than
being a request for assignment assistance as TAT contends, is
merely notification of and an apology for her failure to complete
the sale. Micu took no action at any time to assign her rights to
a third party.
Generally, Massachusetts law requires sale of foreclosure
property by public auction. Mass. Gen. Laws ch. 183, § 21. “[I]n
mortgage foreclosure sales, if the highest bidder fails to pay, the
trustee of the property may declare that the next highest bidder
may purchase the property, may resell the property promptly, or may
readvertise the sale for another day.” 146 Dundas Corp. v. Chemical
Bank, 511 N.E.2d 520, 524 (Mass. 1987). Courts have explained that
efforts to "resell the property promptly" must take place at the
public auction, not through a private sale which is not advertised
to the public. See id. at 524 (collecting cases). After being
notified of the Florence offer, SRC's attorney researched the issue
and concluded, based on his interpretation of state law, that SRC
could not accept Florence's offer because it was outside the
foreclosure auction process. Less than two months after the first
auction took place, SRC held the second foreclosure auction and
sold the property to the highest bidder at the auction. Based on
these facts, SRC did not violate its duty of good faith and
reasonable diligence by failing to arrange a sale to Florence.

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Nor did SRC violate its fiduciary duties by failing to
discuss the Florence offer with TAT. A mortgagee's fiduciary duty
to junior lienholders generally requires that the mortgagee inform
parties whom it knows to be interested in buying the property of an
upcoming sale. See Sandler, 198 N.E. at 751 (finding that failure
to give notice of sale to a party with a pre-mortgage attachment
who had expressed her intention to buy was evidence of bad faith);
Danielczuk v. Ferioli, 388 N.E.2d 724 (Mass. App. Ct. 1979)
(finding disputed reasons for mortgagee's failure to meet with
prospective bidder prior to foreclosure sale were material to
question of compliance with fiduciary duties); see also In re
LaPointe, 253 B.R. 496, 500 (1st Cir. B.A.P. 2000) (upholding
bankruptcy court's finding of lack of reasonable diligence by
foreclosing bank for failing to provide notice of sale to a party
it knew to be interested in buying). It is undisputed that SRC
informed Florence of the upcoming auction.
TAT argues that a mortgagee has, in addition to its duty
to inform interested buyers of an upcoming auction, a duty to
inform junior lienholders of the existence of interested buyers.
However, TAT fails to provide any case law to support this
assertion or any meaningful explanation of why such a duty would
protect TAT's interest in the property in this case. TAT argues
that, if it had been informed of the Florence offer, it "may have
been able to consummate the sale of the Property to him." However,

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TAT does not explain how it could have facilitated a sale to
Florence, nor has it presented any evidence supporting the
inference that it could have done so.
Presumably, circumstances may exist where a court could
infer bad faith from a mortgagee's failure to mention an offer of
sale to lienholders. If, for example, a mortgagee was secretive or
evasive in discussing the details of an upcoming auction with
prospective buyers and purchased the property itself, its failure
to disclose to junior lienholders that more substantial offers had
been proposed by other buyers would certainly be suspect. Cf. Bon
v. Graves, 103 N.E. 1023, 1026 (Mass. 1914) (noting that a
mortgagee's evasiveness with interested buyers, along with other
circumstances, showed that he was acting in the interest of buying
the property at his own price rather than the highest price
competitive bidding could bring). However, in this case, SRC fully
informed Florence of the opportunity to bid on the property through
the public auction. Furthermore, SRC was not the buyer and TAT
does not allege that SRC was colluding with the buyer to lower the
sales price. Thus, no breach of its fiduciary duties can be
inferred from SRC’s failure to discuss the Florence offer with TAT.
C. Motion to Amend Answer and Add Counterclaim
A denial of a motion to amend under Fed. R. Civ. P. 15(a)
is generally reviewed for abuse of discretion. See Hatch v. Dept.
for Children, Youth & Families, 274 F.3d 12, 19 (1st Cir. 2001).

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Rule 15(a) states that "leave shall be freely given when justice so
requires." Accordingly, "unless there appears to be an adequate
reason for the denial (e.g., undue delay, bad faith, dilatory
motive on the part of the movant, futility of the amendment), we
will not affirm the denial." Hatch, 274 F.3d at 19.
In this case, TAT filed its motion to amend its answer to
add a counterclaim against SRC under Mass. Gen. Laws ch. 93A for
unfair and deceptive business practices. In its decision and order
granting summary judgment for SRC on TAT's counterclaims, the
district court also denied the motion to amend as futile, finding
that TAT's arguments "relate[d] either to the[] insufficient claims
or to the factual allegations underlying them" involved in its
other counterclaims, which the district court had already rejected.
We therefore analyze whether TAT's proposed amendment is properly
characterized as futile. See Hatch, 274 F.3d at 19.
As a preliminary matter, SRC argues that relief under
Mass. Gen. Laws ch. 93A is not available in this case because TAT
"puts forth no allegations that a commercial transaction took place
between SRC and TAT." Under Massachusetts law, whether ch. 93A
applies to an "interaction between two parties requires a dual
inquiry: first, the court assesses whether the interaction is
'commercial' in nature, and second, it evaluates whether the
parties were both engaged in 'trade or commerce,' and therefore

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acting in a 'business context.'" Linkage Corp. v. Trustees of
Boston Univ., 679 N.E.2d 191, 206-7 (1997).
An interaction is not commercial in nature if it is a
"purely private" intra-enterprise interaction, i.e., "where the
undertaking is not 'in the ordinary course of a trade or
business.'" Linkage Corp., 679 N.E.2d at 207 n.33 (citation
omitted). Such interactions include "disputes stemming from an
employment relationship, disputes between individual members of a
partnership arising from partnership business, and transactions and
disputes between parties to a joint venture and between fellow
shareholders." See id. (citing Szalla v. Locke, 657 N.E.2d 1267
(Mass. 1995)).
The dispute between SRC and TAT does not appear to be
purely private. While SRC and TAT do have a fiduciary
relationship, SRC's handling of the foreclosure auction was not an
intra-enterprise transaction but the management of the sale of a
property through public auction. See Szalla, 657 N.E.2d at 1270
(noting that sales generally offered to the public are included in
the statutory definition of commerce).
However, we need not decide this issue. Assuming
arguendo that the interaction between SRC and TAT regarding the
foreclosure sale is not generally barred from the application of
ch. 93A, we find that the district court's decision to deny the
motion to amend should still be affirmed.

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"Chapter 93A is 'a statute of broad impact which creates
new substantive rights and provides new procedural devices for the
enforcement of those rights.' The relief available under c. 93A...
'is neither wholly tortious nor wholly contractual in nature, and
is not subject to the traditional limitations of preexisting causes
of action.' It 'makes conduct unlawful which was not unlawful
under the common law or any prior statute.'" Kattar v. Demoulas,
739 N.E.2d 246, 257 (Mass. 2000) (citations omitted). However,
some form of deceptive or unfair conduct must be alleged. See
Mass. Gen. Laws ch. 93A, § 2 (declaring "[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce" unlawful). "Chapter 93A does not
define what constitutes an unfair or deceptive act or practice . .
. . [U]nfair or deceptive conduct is best discerned from the
circumstances of each case." Kattar, 739 N.E.2d at 257 (citations
and internal quotation marks omitted).
To supports its claim for ch. 93A relief, TAT asserts
that SRC should have accepted or disclosed the Florence offer in an
effort to effectuate a sale. However, as the district court
concluded in granting summary judgment for SRC on TAT's breach of
fiduciary duty claim, there was nothing unfair or deceptive about
SRC's conduct, which it pursued for the purpose of complying with
state law. That summary judgment ruling adequately demonstrates
the futility of TAT's motion to amend.

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Focusing on the consequences of SRC's handling of the
Florence offer rather than the conduct itself, TAT argues that
SRC's conduct was unfair because it caused substantial injury to
TAT. See Morrison v. Toys 'R' Us, Inc., 806 N.E.2d 388, 392 (Mass.
2004) (noting that "'a practice or act will be unfair under [ch.
93A] if it is (1) within the penumbra of a common law, statutory,
or other established concept of unfairness; (2) immoral, unethical,
oppressive, or unscrupulous; or (3) causes substantial injury to
competitors or other business people'") (citation omitted).
However, the injury that TAT asserts it has suffered -- the loss of
"hundreds of thousands of dollars as a result of the diminution in
sales price from $2 million to $1.2 million" -- is not a result of
SRC's conduct, but is a consequence of the foreclosure process and
its requirements. The property was sold to the person with the
highest bid at the second auction. SRC invited Florence to
participate in the auction, but Florence declined. As TAT based
its allegations of wrongdoing under ch. 93A entirely on SRC's
handling of the Florence offer, its motion to amend was futile, and
the district court properly denied it.
III.
In its cross-appeal, SRC argues that the district court
erred by not requiring TAT to disgorge the funds it received from
the auction proceeds given its failure to indemnify SRC as per an
indemnification agreement. In response, TAT argues that SRC failed

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to adequately raise the indemnification enforcement argument before
the district court. SRC asserts that it adequately raised the
argument by (a) alleging in the complaint that SRC disbursed funds
to TAT in reliance on TAT's representation that it would indemnify
SRC and (b) arguing in its Memorandum in Support of its Motion for
Partial Summary Judgment that "'by accepting and negotiating the
payment, TAT agreed to the terms of the contract and waived any
challenge it may have to the distribution of surplus funds.'"
"This circuit religiously follows the rule that issues
not presented to the district court cannot be raised on appeal."
Ouimette v. Moran, 942 F.2d 1, 12 (1st Cir. 1991). "Merely
mentioning an issue in a pleading is insufficient to carry a
party's burden actually to present a claim or defense to the
district court before arguing the matter on appeal." Violette v.
Smith & Nephew Dyonics, 62 F.3d 8, 11 (1st Cir. 1995).
SRC did not adequately press the indemnification
enforcement argument before the district court. SRC mentioned the
indemnification agreement in its memorandum on summary judgment
only in support of its argument that "TAT is estopped from
challenging the distribution of post foreclosure funds" and "waived
any challenges." Nowhere in its memorandum did SRC argue, as it
does on appeal, that the district court should require TAT to
"disgorge surplus funds it received" to SRC. Notably, SRC also
failed to mention this claim in its motion for final judgment,

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SRC also argues that the district court erred by denying its 1
motion to strike inadmissible portions of an affidavit submitted by
TAT in support of its opposition to SRC's motion for partial
summary judgment. The district court acknowledged SRC's arguments
that portions of the affidavit in question failed to demonstrate
requisite personal knowledge and included inadmissible statements.
However, the district court denied SRC's motion as moot, since
summary judgment was granted in favor of SRC and the affidavit was
submitted in support of TAT's opposition to SRC's motion for
summary judgment. That mootness ruling was correct. Since we have
affirmed the district court's summary judgment ruling for SRC on
appeal, there is also no need for us to further address the
district court's ruling on the motion to strike.
-25-
after the district court specifically requested that SRC file "a
proposal for final judgment resolving any remaining issues." State
Res. Corp., 2005 U.S. Dist. LEXIS at *60. SRC did not press this
claim in the district court and therefore cannot seek review on the
basis of it now. See G.D. v. Westmoreland School Dist., 930 F.2d
942, 950 (1st Cir. 1991) ("[A]n appellant cannot evade the scrutiny
of the district court nor can he surprise the court on appeal with
a new claim in order to create essentially a new trial.").1
The decision of the district court is affirmed. Each party
shall bear its own costs.
So ordered.

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