Opinion ID: 201972
Heading Depth: 2
Heading Rank: 3

Heading: The Foreclosure Auctions and Disbursement of Proceeds

Text: 9 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. 10 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. 11 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 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. 12 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. 13 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, which included a provision stating that TAT had a $600,000.00 real estate lien on the property. 14 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.