Middlebury Equity Partners v. MWJ Siam, No. S0391-04 CnC (Katz, J., 

Feb. 15, 2005) 

[The text of this Vermont trial court opinion is unofficial. It has been 

reformatted from the original. The accuracy of the text and the 

accompanying data included in the Vermont trial court opinion database is 

not guaranteed.] 

STATE OF VERMONT SUPERIOR COURT 

Chittenden County, ss.: Docket No. S0391-04 CnC 

MIDDLEBURY EQUITY PARTNERS, LLC 

v. 

MWJ SIAM, INC. 

 

ENTRY 

 This foreclosure action involving a Burlington restaurant raised a 

number of estoppel and fraud counterclaims asserted by the mortgagor 
restaurant owner. Mortgagees dispute that their acts constitute 

misrepresentations, seek to dismiss the counterclaims, and advance 

foreclosure proceedings. 

 There are several tangentially related business transactions that 

provide context to the current dispute. Wanvadi Jotikasthira and Manatat 

Waiwong formed a partnership, PJ Associates, and a corporation, MWJ 

Siam, Inc, to start a Thai restaurant in Burlington. In 1994, the two 

obtained a bank loan to purchase a building and equipment for the 

restaurant through Banknorth. For security, the business gave the bank a 

mortgage to the property. Waiwong and Jotikasthira also gave their own 

personal obligations. The restaurant was a successful business, but a series 

of disputes arose between Jotikasthira and Waiwong that led to litigation 

and dissolution of their partnership. To keep the restaurant going, 

Jotikasthira bought Waiwong out and convinced the bank to release 

Waiwong from the mortgage in 2002. 

 After this, Jotikasthira, through MWJ Siam, re-opened the business 

but struggled, as borrower, to make mortgage payments. By early 2003, the 

borrower had fallen behind in payments, accumulating $30,000 in past due 

amounts. In March, however, the borrower worked to bring its outstanding 

balance down and made several substantial payments. By the summer of 

2003, the amount past due had shrunk significantly, but not completely, and 

was beginning to grow again. Around this time, the bank chose to 

accelerate the mortgage and sell the note to a third party. On June 24, 

2003, the bank’s attorneys sent a letter to the borrower notifying it that 

because the mortgage was past due, the bank had elected to accelerate the 

loan. This, explained the letter, meant that the total outstanding amount of 

the loan, $223,000, was due, and that the bank intended to proceed with 

foreclosure. The letter also stated: 
At the sole option of the Noteholder, partial payments may be 

accepted to reduce the amount owed, but only a written agreement 

between the Noteholder and the Borrower shall alter the demands 

made in this letter. Acceptance by Noteholder of any payment in 

an amount less than the total payoff after the date of this letter shall 

not operate to extend the time of payment of any amount then 

remaining unpaid or constitute a waiver of any of its rights.

 

 In July, the borrower received a computer generated past due notice 

from the bank stating that the borrower had a past due amount of $8,800. 

MWJ Siam sent a check for $2,000 to the bank to reduce this amount. The 

bank returned the money with a note for the borrower to contact the loan 

officer. In August, the borrower contacted the bank by e-mail. A 

representative of the bank wrote that the mortgage was being sold and that 

payments should be held as the new owner would bill the borrower directly 

but would also retain all rights previously held by the bank. Meanwhile, 

the bank continued to send computer generated statements showing the 

steadily growing amount past due. The borrower received such monthly 

statements from July through November. In November, Middlebury Equity 

purchased the mortgage from the bank and soon thereafter initiated this 

action for foreclosure. 

 Foreclosure on a mortgage is an action in equity permitting a 

mortgagee to enforce its right to the property, to satisfy the debt owed, and 

thereby extinguish the debtor–mortgagor’s rights to the property. See, e.g., 

New Eng. Educ. Training Serv. v. Silver St. P’ship, 156 Vt. 604 (1991); see 

generally Am. Jur. 2d Mortgages §§ 512–516. Such an action must be 

predicated on a failure of the mortgagor to perform the mortgage 

agreement. 4 J. Backman, Powell on Real Property § 37.37[3] (1999). 

Defaulting on a payment or part of a payment is just such a breach. See 
Merchant’s Bank v. Lambert, 151 Vt. 204, 206 (1989) (discussing bank’s 

role in party’s default and resulting foreclosure). In this case, the bank’s 

original note included an acceleration clause, a condition long standard in 

mortgage documents. Cf. Freedley’s Admx. v. Manchester Marble Co., 99 

Vt. 25, 35 (1925) (noting that acceleration of payments was separate from a 

foreclosure action). This clause permitted the bank to accelerate the 

mortgage if the borrower defaulted on an installment payment so that the 

entire principal sum becomes due. Once a mortgage is so “accelerated,” the 

total amount is due, and the mortgagor can avoid foreclosure only by 

paying the total outstanding mortgage. 4 Backman, § 37.37[3] (citing to 

sample cases); Am. Jur. 2d Mortgages § 488 (“The proposition is accepted 

without dispute that a stipulation in a mortgage providing that the whole 

debt . . . is to become due and payable upon the failure of the mortgagor to 

pay the interest or any installment of principal . . . is a legal, valid, and 

enforceable stipulation.”). 

 Thus, when the bank gave the borrower notice of acceleration and its 

intent to foreclose on the mortgage, it ended the borrower’s right to satisfy 

the debt by installment payments, and the borrower’s outstanding debt went 

from the past amount due to the entire remaining balance. The borrower 

does not challenge the bank’s right to accelerate payments on the mortgage. 

Indeed, the borrower’s default status and the language of the mortgage 

agreement’s acceleration clause gave the bank every right to accelerate. 

Likewise, the borrower does not challenge Middlebury Equity’s assigned 

right to accelerate and foreclose based on the contract. 

 What the borrower argues is that the computer statements issued 

after the notice of acceleration and intent to foreclose represented a kind of 

“workout offer” or equitable equivalent, under which the bank backed off 
its prior right to acceleration and reverted to an installment payment 

program. See 4 Backman, at § 37.35 (describing a “workout” wherein a 

mortgagee agrees to a new payment schedule in lieu of foreclosure with the 

defaulted mortgagor). This then induced the borrower to rely on the old 

installment payment plan and not prepare for an imminent foreclosure. The 

argument is one of promissory estoppel. This doctrine states that a court 

will enforce a promise if the promisor reasonably expects to and actually 

does induce action or forebearance in the promisee. Foote v. Simmonds 

Precision Prods. Co., 158 Vt. 566, 573 (1992) (quoting from the 

Restatement (Second) of Contracts § 90. 

 The problem with applying this argument is that it ignores the plain 

language of the bank’s notice of acceleration quoted above. The 

acceleration letter makes clear that any type of restructuring or “workout” 

that would renew installment payments would have to be the result of a 

written agreement between the mortgagor and mortgagee. Cf. Standard 

Chartered Bank v. Red Rock Commodities Ltd., 151 F.R.D. 261, 263 

(S.D.N.Y. 1993) (noting that an alleged promise extending financing was 

not meritorious where the loan document stated it could only be modified in 

writing). This is consistent with the general function of workouts as 

agreements between parties to restructure loans to avoid foreclosure. 4 

Backman, at § 37.35 (noting that the form workouts take are endless and 

limited only by the “imagination and nerve of the parties”). Here the bank 

made clear that it did not intend to alter its acceleration and foreclosure 

actions, and to the extent it reserved its right to do so, nothing short of a 

written agreement between the parties would suffice. 

 Why, then, would the bank, after its clearly stated intent to limit 

renegotiation, suddenly revert to the old installment schedule without 
notice, consideration, or explanation? The borrower argues that a 

computer-generated, automatic notice created a kind of unilateral 

alternative offer. But this interpretation flies in the face of a cardinal rule of 

contract interpretation that requires courts to interpret such offers within the 

context of their circumstances. Isbrandtsen v. North Branch Corp., 150 Vt. 

575, 578 (1988). Any subjective beliefs that borrower formed upon 

receiving regular monthly computer statements are irrelevant. Quenneville 

v. Buttolph, 2003 VT 82, at ¶ 15. Those statements lack any signal of 

intent that would reasonably suggest that they represented such offers or 

waivers of its clear acceleration. Furthermore, the bank displayed no such 

intent as to make such statements suffice as even unilateral offers. See 

Starr Farm Beach Campowners Ass’n v. Boylan, 174 Vt. 503, 505 (2002) 

(mem.) (“An enforceable contract must demonstrate a meeting of the minds 

of the parties: an offer by one of them and an acceptance of such offer by 

the other.”). 

 The bank’s August e-mail communications do nothing to undermine 

these conclusions. While they do not state the bank’s position with the 

same clarity as the June acceleration letter, they do not mislead about the 

state of the mortgage; they do not back off acceleration. For example, one 

of the borrower’s inquiries was about the bank’s refusal to accept 

installment payments in July. The bank responded that it was no longer 

accepting payments because it was selling the loan, as its default status was 

too high a risk. This fact is undisputed. Further, the bank suggested that 

the borrower save the payments for the purchaser, who the corresponding 

bank employee seemed to believe would offer the borrower some kind of 

workout. When Middlebury Equity chose instead to enforce the 

acceleration clause and commence this foreclosure, the borrower may have 

been disappointed, but that cannot be attributed to a promise or false 
statement in the bank’s e-mails because the employee’s statements merely 

suggest the possibility but do nothing to promise it. It is important to keep 

in mind that proper interpretation of this correspondence is an objective 

question, not driven by the subjective reaction of the debtor. Green Mt. 

Inv. Corp. v. Flaim, 174 Vt. 495, 497–98 (2002) (noting that the reliance 

must be reasonable, that a promise is enforced only if injustice can be 

avoided and emphasizing the latter as a question of law). 

 This leaves us with the question of whether the July-throughNovember, computer generated bank statements represent a type of 

promise which fairly induced some kind of reliance in the borrower. As an 

equitable doctrine, promissory estoppel’s application is dependent on 

justice, fairness, and reasonableness. E.g., Remes v. Nordic Group, Inc., 

169 Vt. 37, 40–41 (1999) (discussing promissory estoppel’s principles in 

the context of damages). Given the context in which the borrower received 

the statements—where the borrower was rebuilding and believed 

themselves to be on the road to solvency—there is an argument to be made 

that the bank statements were confusing. Any such confusion, however, 

should have been more than adequately cured by a re-reading of the 

acceleration notice and the bank’s consistent refusal to either accept 

installment payments or re-negotiate their reinstatement. In other words, 

the bank statements do not represent a promise to the borrower contrary to 

the acceleration notice. To read otherwise would elevate a confusing 

gesture above the bank’s additional actions and statements which contradict 

the borrower’s proffered interpretation. To further conclude that these 

computerized bank statements represented a unilateral promise to return to 

the original defaulted installment plan would be unjust to the bank and its 

rights under the mortgage agreement. 
 Beyond this, it is also unclear what reliance was induced by the 

bank’s computer statements. The borrower argues that it relied on the bank 

statements to its detriment but has some difficulty identifying the detriment. 

To the extent that the borrower is arguing that its reliance prevented it from 

obtaining the entire mortgage amount, there is no detriment as the borrower 

has been and is still able to do exactly that. The statutes of redemption 

allow a mortgagor to redeem its rights in the property up to six months after 

foreclosure. 12 V.S.A. § 4528. As this right to redeem still continues, 

borrower fails to show a detriment. Instead, it argues that if it had known 

that foreclosure was looming, it would have scraped the past amount due 

together and would have brought its balance current, before the sale to 

Middlebury Equity. This is something the borrower was already obliged to 

do, foreclosure notwithstanding, and the bank statements did not prevent it 

from doing so. The fact that the bank refused to accept even partial 

payment goes to the larger point that the bank had accelerated the mortgage 

on June 24th and that made the whole amount due. Thus, even if the 

borrower had raised the $12,000 it had past due and the bank had accepted 

it, this would not have cancelled the acceleration. Cf. 4 Backman, at § 

37.37[3] n. 15–17 (citing to states with statues that do allow for mortgagors 

to cancel accelerations in this manner). The remaining $211,000 would 

still have been due and Middlebury Equity’s right to foreclose would be the 

same. The loss of an opportunity in this sense is not actionable under law 

or equity. Ragosta v. Wilder, 156 Vt. 390, 396 (1991) (action or inaction 

taken in reliance must be “of a definite and substantial character”). 

Moreover, even had borrower overcome the acceleration issue, it has made 

no factual showing to support her conclusory implication of detriment 

merely from having “arranged” for the loans. 

 We therefore conclude that borrower has failed to establish the 
elements necessary for a promissory estoppel claim. As well, this 

discussion also demonstrates the failure of borrower to establish the 

evidence of negligent misrepresentation. Hedges v. Durrance, 2003 VT 63 

(negligent misrepresentation requires the tortfeasor to supply false 

information that another party relies upon). Here, none of the information 

that the bank provided was false. While the computer-generated statements 

were misleading, their damage was more than adequately corrected by their 

context and by the lack of reliance by borrower. 

 Borrower claims that the computer-generated statements breached 

the implied covenant of good faith and fair dealing Carmichael v. 

Adirondack Bottled Gas Corp., 161 Vt. 200, 208–09 (1993) (quoting the 

Restatement (Second) of Contracts § 205 cmt. d to define bad faith as 

“harassing demands for assurances of performance, rejection of 

performance for unstated reasons, willful failure to mitigate damages, and 

abuse of a power to determine compliance or to terminate the contract”). 

We do not see, as a matter of law, that the computer-generated bank 

statements are the factual equivalents of harassing behavior or willful 

failures, which would violate the clause of good faith and fair dealing. At 

worst these statements are the product of a lack of oversight by the bank—a 

note of confusion dropped into a tense business situation—but they lack the 

purposefulness of Adirondack Gas. Id. at 210–11 (company’s harassing 

demands, short deadlines, and ambiguous prior dealings created a question 

of good faith and fair dealing for the jury). There simply is no evidence of 

harassing behavior, exploited ambiguities, or rejection of borrower’s 

advances for unexplained or unjustified reasons. 

 

 This leaves us with borrower’s sole remaining claim of consumer 

fraud. The claim is essentially that the borrower relied on the bank 

statements to form a misrepresentation that the bank had silently rescinded 
the acceleration and foreclosure. Assuming for the moment that the 

borrower did rely on such bank statements, since there is no evidence that 

the borrower was damaged, Russell v. Atkins, 165 Vt. 176, 181 (1996) 

(parties must have either relied on or been damaged by the 

misrepresentation), there is no reason to conclude that the bank statements 

had the capacity to deceive or that the borrower’s interpretation of the 

statements was reasonable. Carter v. Gugliuzzi, 168 Vt. 48, 56 (1998) 

(“Deception is measured by an objective standard, looking to whether the 

representation or omission had the ‘capacity or tendency to deceive’ a 

reasonable consumer.”). Despite the borrower’s characterizations, the bank 

statements can best be described as having the capacity to confuse. Any 

confusion, however, is greatly lessened when put in the context of the 

situation. 

 Despite its efforts to cure default, the borrower owed past due 

amounts on its mortgage. In June, it received a letter from the bank 

accelerating the mortgage—bringing the total amount due—and notifying 

of its intention to foreclose. The letter also tells the borrower that this 

situation would not be modified by any act short of a written agreement 

between the two parties. For the next few months, borrower receives 

computer-generated bank statements akin to the kind it had received prior 

to the acceleration letter, but this time when it tries to make partial 

payments, the bank refuses to accept them and notifies borrower that it is 

selling the mortgage to another party who may accept the payments but 

who has the same rights (including foreclosure) that the bank has. From 

this borrower suggests it was perfectly reasonable for it to believe that the 

bank had stopped the acceleration and returned to its prior installment 

system. This is simply not a reasonable conclusion. 
 Given the vast array of contradictory facts, borrower’s alleged 

subjective belief that the computer statements constituted a rescission of 

acceleration were more of a hope, which at best exaggerated some potential 

confusion latent in the computer statements. Apart from this subjective 

interpretation, the statements simply do not have an objective capacity to 

deceive, nor did give a reasonable misrepresentation within the context of 

the bank’s legitimate acceleration and foreclosure. In the context of the 

bank’s original acceleration letter and latter e-mails, the only objective 

reading must be that acceleration remained the status of the debt. 

 We are further troubled by the concept of a consumer fraud claim 

arising out of a commercial loan. The borrower cites to several out-of-state 

cases and one Vermont superior court decision to support the idea that a 

loan is a “service” within the definition of 9 V.S.A. § 2451a (b). With one 

exception, the cases cited by the borrower deal with consumer loans—

either credit cards or home mortgages. The sole exception comes from a 

federal case interpreting a South Carolina statute with different terminology 

than Vermont’s. Compare McTeer v. Provident Life and Acc. Ins., 712 F. 

Supp. 512, 515 (D.S.C. 1989) (defining terms “trade” and “commerce”), 

with 9 V.S.A. § 2451a (b) (defining the equivalent terms “goods” and 

“services”). The conclusion that mortgages are a “service” is far from 

universally accepted. D. Zupanec, Annot., Scope and Exemptions of State 

Deceptive Trade Practice and Consumer Protection Acts, 89 A.L.R.3d 399, 

at § 9 [f] (1979, 2004 Supp.); M. Evans, Annot., Who Is a “Consumer” 

Entitled to Protection of State Deceptive Trade Practice and Consumer 

Protection Acts, 63 A.L.R.5th 1, at § 7 (1998). 

 The fact that some courts have interpreted their particular state’s 

variation of consumer fraud law to allow individual claims against a bank is 
not an open-ended proposition for all banks and all possible consumers. 

Consumer fraud acts were designed “to prevent fraud and deception in 

consumer transactions.” 89 A.L.R.3d at 399. In Vermont, the statutory 

language favors claims against discrete transactions where something is 

bought, such as a tangible object, or sold, such as a discrete service. See, 

e.g., Carter, 168 Vt. at 52–53. Mortgages do not easily fit under this 

umbrella concept of “services” as it is at once a broader “service” and 

involves the exchange of intangible property “rights” defined by statute. 12 

V.S.A. §§ 4528–4533. Commercial loans are even more difficult as they 

involve business-to-business transactions, which suggests more 

sophisticated parties, greater leverage for negotiation, and more complex 

terms and transactions. 

 Notwithstanding the liberal nature of the Consumer Fraud Act, this 

case simply does not support an action where the activities complained of 

were, at best, irregularities, isolated elements of a larger, straightforward 

relationship. See Bloomberg v. Farm Bureau Life Ins. Co. of Michigan, 

438 N.E.2d 1247, 1250 (Ill. 1982) (rejecting consumer fraud claim against 

mortgagee for isolated breaches of contract and “farfetched” theories of 

“deviant behavior”). We decline for this reason as well to apply the 

Consumer Fraud Act to the bank’s failure to stop sending computer 

statements of the borrower’s lapsed installment payment plan. 

 Based on the foregoing, Middlebury Equity and Banknorth’s 

motions to dismiss are granted. MWJ Siam’s counterclaims are dismissed. 

 Dated at Burlington, Vermont________________, 2005.