H.A.T., LLC v. Greenleaf Apartments, LLC - Contract Dispute

MAINE SUPRE ME JU DICI AL CO URT Reporter of De cisions Deci sion: 20 26 ME 20 Docket: BCD - 25 - 18 Argued: September 10, 2025 Decided: February 26, 20 26 Panel: STANFILL, C.J., and MEAD, CONNORS, LA WRENCE, DOUGLA S, and LIPEZ, JJ. H.A.T., LLC v. GREENLEAF A PARTMENTS, LLC, et al. MEAD, J. [¶1] H.A.T., LLC, ap peals from a judgment entered in the Business and Consumer Doc ket (Duddy, J.). H.A.T. argues that the court erred in concluding that H.A. T. breache d its contract with Greenleaf Apartments, LLC, t ha t H.A. T. was not entitled to insurance proceeds that Greenleaf obtained, and th a t Greenleaf was not required to send H.A.T. a notice o f a right to cure a default. We affirm the judgment. I. BACKGROUND A. Fact s [¶2 ] The following f acts are drawn fr om the pr ocedural record and from the tr ial co urt’ s ex ten sive find ings of fa ct, w hic h are s upp orted by co mpe tent

2 eviden ce in the reco rd. See H&B Realty, LLC v. JJ Cars, LLC, 2 021 ME 14, ¶ 2, 246 A.3d 1176. [¶3 ] On January 1, 2008, H.A.T., whi ch is cont rolled by David O’Donnel l, entered into a bond - for - deed agreement titled “Conditional Con tract for Sale of Land and Buil dings” with Greenleaf, which is controlled by Rich ard Harris Jr., to pay one million dollars for t hree buildings in Portland containing fifteen rental units. Bo th parties were repr esented by counsel. H. A.T. purch ase d th e p roperty as a comm ercial investment that it managed as a business enterprise. Neither O’Donnell nor H.A.T. ever occ upi ed the p roperty or used the p roperty as a dwelling. [¶4 ] Unde r the ter ms o f the co ntr act, H.A.T. made a downpayment of $40,000 and gave Greenleaf a promissor y note for $970,032, to be paid in monthly inst allments. The contr act a ss igne d H.A.T. all rights arising from any insurance policy maintained by Greenleaf on the prop erty. H.A.T. took immediate possession of the property but would no t acquire title to the property until the note was fully paid. H.A.T. gave Greenleaf a mortgage on three of its other proper ties to secure the note and fur ther assigned t o Greenleaf all its r ights to the pro ceeds of any fire or hazard insurance policy covering the property. Immediately after closing, however, prom pted by

3 Green leaf ’s concer ns wit h cer tain pro visio ns of t he co nt ract a nd with the mortgage securing the note, the parties executed a post - closing agreement t o further protect Greenleaf. [¶5 ] On Apri l 6, 2009, pr omp ted by H.A.T. ’s request that Greenleaf subordinate to another lender its security interest in one of the proper ties securing the note, the parties e xecuted a memorandum of agreement that is central to this appeal. Pursuant to the memorandum o f agreement, H.A.T. exec uted a n un date d ag reem en t to term inate the contr ac t, which pro vide d t hat the agreement shall be held in escrow by Murray, Pl umb & Murray [(MPM) (Greenleaf’s counsel) ] and may be released by [MPM ] f or recording upon the happening of any “event of defaul t,” including. .. the failu re to timely make any payment under [the ] Promissory Note.... N o not ice n eed be gi ve n by Gr een le af t o [H.A.T. ] pri or to release of the Agreem ent for recording in the event of any default in making ti mely payments . . . . [¶6 ] Foll owin g th e exe cution of the te rmin atio n agr eem ent, t hre e separate casualty events affecting the buildi ngs — a roof leak, a pipe f reeze leading to water damage apparen tly resulting from a failure to adequately heat the property, and a kitchen fire — necessitated t hat G reenleaf lend large amounts of money to H.A.T. to fun d r ep airs, sub stan tial ly incre asin g H.A.T. ’s

4 debt to Greenleaf. 1 The loans led to H.A.T. sig ning two more promissory notes, one for $25,000 and another for $155,30 2. Some, but not all, of the losses wer e covered by Greenleaf’s insurance; H.A.T. was not aware that Greenleaf received $80,964 f rom its insurance carrier. [¶7 ] H.A.T. was seriously delinquent under the contract and the large r additional promissory note through November 2015 and beyond. On November 9, 2015, Greenleaf’s cou nsel wrote to H.A.T. ’ s counsel requ esting that “all of the arrear ages [be] cleaned up by year [’ s] en d,” or else th e parties’ relationship would “have to [be] recon sider[ed].” In H.A.T. ’s response, i t acknowledged the unpaid debt an d admitted that “it is probably not possible for H.A.T. or [O’ D onnell] to me et the m on thly $ 12 - $1 3,000 i n not e obligations.” H.A.T. raised the issue of the existence and amount of insur ance coverage in proposing a renegotiation of the deb t repayment. [¶8 ] In January 2016, Greenleaf advised H.A.T. tha t of the $153,9 65 owed on the notes in 2015, $111,000 had been paid, resulting in a shortfal l of ju st under $43,000. Th e letter ended b y stating that it “cannot be taken as any waiver of a default; t here are numerous c ontinuing defaults outstanding at t his point which [Greenleaf] in no way waive[s].” 1 Greenleaf also lent H.A.T. $30,0 00 “t o catch up on its u tilit y bill.”

5 [¶9 ] In May 2016, Greenleaf proposed conso lidatin g all of H.A.T. ’s de bts into on e l oan, de ducting the a mount from the insuranc e reimbursement received by Harris for the water damag e. That loan would be for $899,779 as of May 1, 2016, wi th seven percent i nterest after that. Greenleaf received no response to this propos al. [¶10 ] On August 26, 2016, MPM, having rec eived evidenc e from Greenleaf that H.A.T. was in def aul t an d ha d been in default for some time, released from escrow the termination agree ment, which Greenleaf then recorded in the registry of deeds. Green leaf advised H.A.T. that it wo uld consider a proposal for H.A.T. to sell the property to another buyer if H.A.T. were able to make such a deal and allowed H.A.T. to continu e operating the property in some re spe cts with t he und ers tandin g that the property would b e sold. H.A.T. was unable to find a bu yer for the property, and on October 19, 2016, Greenleaf formally ousted H.A.T. from the property. B. Procedur al Hist ory [¶1 1] On Decem ber 23, 2 019, H.A.T. fil ed a complaint against Greenleaf and MPM, wh ich, as l ater amended, alleged (1) a statutory right of redemption, (2) a claim for deceptive practices or fraud, (3) a c lai m fo r promissory or equitable estoppel, (4) a cla im for breach of contract, (5) a cl aim for

6 betterments, (6) a claim of un cons ciona bil ity, and (7) a request for qua nt um meruit or other eq uitable relief. 2 Greenleaf co unterclaimed for breach o f contr act. [¶12 ] Afte r MP M m oved to dis mis s the com pla int a gains t it purs uant to M.R. Civ. P. 12(b)(6), the case was transfer red to the Busines s and Consumer Docket. Following a hearing, the court granted the motion and dism issed all clai ms against MPM. [¶13 ] T he co urt held a be nch tria l fr om Apri l 8 to 11, 2024, on t he remaining c laims against Greenl eaf. The co urt subsequently entered judgmen t for Greenleaf on all counts of H.A.T. ’ s complaint and on the counterclaim, concl udin g tha t H.A.T. had payment defaults that entitled Greenleaf to foreclose. H.A.T. moved for further findings of fact and conclusions of law pursuant to M.R. Civ. P. 52 (b). Aft er a hear ing, t he co urt gran ted the mo tion in part and made further findings of fact and c onclusions of la w. It de ni ed H.A.T. ’ s request to amend the judgment, however, because its additional findings of fact and conclusions of law were unfavorable to H.A.T. and did not change the outcome of the original judgment. 2 H.A.T. also asserted a claim that a p rospective p urchaser of t he property had breached h is contract to buy the property, as w ell as a cla im of un fair trade p ractices. These cl aims were later dismissed by agreement.

7 [¶14 ] The court entered a fina l judgment on Dec ember 30, 2 024, awarding Greenleaf $8,281.77 in costs, $386,953.35 in at torney f ees, a nd post - judgment statutory interest. H.A.T. timely app ealed. See M.R. App. P. 2B(c)(2). II. DISCUSSION A. H.A.T. breached the contract with Gre enleaf. [¶15 ] H.A.T. conten ds that the cour t err ed in f ind ing tha t Greenleaf was justified in recordin g the termination agreem ent because H.A.T. h ad breached the co ntr act. The cour t fo und that the re was ample evidence of numerous performance deficits by H. A.T. when it was in possession o f the property and that a ny one of them would justify Greenleaf’s election to procee d with foreclosure. [¶16 ] “Whe ther a brea ch of con tra ct has o ccur red is a f ind ing o f fa ct review ed for clear error.” H&B Realty, LLC, 2021 ME 14, ¶ 1 0, 246 A.3d 1176 (quotati on marks omitted). 1. H.A.T. was i n default at the time the termination agreement was filed due t o missed payments. [¶17 ] The contract and at tached promissory note required H.A.T. to make monthly payments to Greenleaf. The am oun t du e each month was recalculated throughout t he relationship between H.A.T. and G reenleaf to

8 account for H.A.T. ’s delinquency and the considerable value of the loans Greenleaf made to H.A. T. Gree nlea f te rmin ated the con tra ct wi th H.A.T. and took back possession of the proper ty in August 2016. At th at time, H.A. T. w as at least three months behind on paym ents to Greenleaf. Under paragraph fourteen of the con tract, H.A.T. ’s failure to make any payment con stit ute d a default. The con tra ct fur ther pr ovid ed that, i n t he event of an unc ured default, “[the] Agreemen t shall be terminated pursuant to any means authorized by law and all of [H.A.T. ’s] interest in the Property shall be terminated.” The 2009 memorandum of agreement creating the termination agreemen t conf irme d th e ter ms o f the or igin al co ntr act, s tatin g that the a gree ment “ma y be released by [MP M] for recor ding upo n th e happ eni ng of any ‘eve nt of d efault,’ includi ng . . . the failure to timel y make any payment. ” (Emphasis adde d). [¶18 ] Concerning H.A.T. ’s mi ssed payments, H.A.T. ’s second amended complaint concedes that when Greenleaf recorded the termi nation agreement on Aug ust 26, 20 16, “[H.A.T. ] had not remitted mon thly payments due in June, Ju ly a nd Augus t, 2016.” O’Donnell’s ema ils and corres pondence also referen ce missed payments. H.A.T., thro ugh counse l, fu rther ac know ledge d that it wa s

9 “ probably not be possible for H.A. T. o r [O’Donne ll] to meet t he month ly $12 - $13,000 in no te obli gations.” 3 [¶19 ] Acco rd ingly, the tria l co urt d id n ot err beca use there is ample eviden ce in the re co rd to support its fin din g th at H.A.T. bre ache d the contr act by missi ng required payment s, and Greenleaf was therefore permitted t o terminat e the con tr act. 2. H.A.T. wa s not ent itled to a credi t for the insurance proc eeds that Greenleaf rece ived. [¶ 20 ] Both in the tr ial court and on appeal, H.A.T. ’s ch ief re butta l to its clear default is that it was enti tled to t he ins urance proceeds that Greenleaf received after the bu rst - pipe incident, or to a set - off for the lost re nt th at result ed from it. 4 ”[W] hether there has been a breach of contract is a question of fact. We wi ll n ot set a side the f actual fin ding s o f the tr ial co ur t un less the y are clearly erroneous. ” VanVoor hees v. Dodge, 679 A.2d 10 77, 108 0 (Me. 1 996) (cita tion omi tted). H.A.T. ’s rebuttal fails for several reasons. 3 I n the summer of 2014, O’Donnell filed a pet ition for bankrup tcy. The petition furt her underscores H.A.T. ’s inability to make the req uired payments an d addres s the arrear ages. Altho ugh not relied on by Greenle af or MPM, the filin g of a petition for bankruptcy also cons titute d an independent ev ent of defa ult under the contract. 4 H.A.T. offers addit ional argument s that we find unp ersuasive, and we will not dis cuss them further.

10 [¶2 1] First, on January 1, 2008, H.A.T. t ransferred to G reenleaf its r ig hts in a ny fire or hazard ins urance policy covering t he Property. The m ortgage securing the original promissory note prov ided: “As f urthe r se curi ty fo r payment of the indebtedness and perfor mance of [its] obligations . . . [H.A.T. ] hereby transfers, sets over and assigns to [Greenleaf] . .. [a]ll rights in or to the proceeds of any fire and/or hazard insurance policy covering the [p] re mi se s and the improvements th ereon.” T herefor e, the record adeq uately supports t he tri al court’ s find ing that Greenleaf had no obligation to include H.A.T. i n it s negotiations with the insurance companies, to disburse insurance proceeds to H.A.T., or to reimburse H.A.T. for re nt lost because of the casualty ev ents. [¶ 22 ] Sec on d, a lthou gh p aragraph eleven, titled “Insurance,” of the bond - for - deed agreement provides that “[Greenleaf] hereby assigns to [H.A.T. ] all of [G reenleaf’s] right s arising from any insurance policy main tained by [Greenlea f ] on the [p] roperty, including all loss pro ceeds, ” H.A.T. wa s n ot enti tled to the bene fit of p aragraph eleven of th e c ontract bec ause Greenleaf had to ste p in to make the necessary re pairs that H.A.T. could not afford. As a result, as si gni ng H.A.T. the rights under the insurance policy would prov ide H.A.T. with an un just windfa ll. 5 This is par ticu larly true given that t h e expenses 5 At trial, O’Do nnell conceded th at Greenlea f was e ntitled to the in surance p roceeds beca use it paid for the repa irs.

11 related to the burst pipe totaled $176,802.46 while the in surance proceeds totaled only $80,964. [¶ 23 ] T hird, t he re is ample ev idence in the record to support the trial court ’s fin ding tha t H.A.T. was not enti tled to set off the amount of Greenleaf’s insuranc e recovery against H.A.T. ’s debt pursuant to parag raph seventeen of the co ntr act, beca use that prov isio n (1) re quir ed tha t H.A.T. be “ in good standi ng unde r [the] [c] ontra ct” an d H.A.T. was not, and (2) was only applicable “[i]n the event that [Greenleaf] defaults in its obligations,” and Greenleaf was never in d efault. [¶ 24 ] Because there is compe tent record evidence to support the co urt ’ s findin g tha t H.A.T. was in default due to missed payments, and that H.A.T. w a s not entitled to the insurance proceeds obtained by Greenl eaf, we disc ern no error in the cou rt ’ s fin ding tha t H.A.T. br eache d the con tra ct. B. Not ice was no t due under 14 M.R.S. § 6203 -F (2). [¶ 25 ] When applica ble, 14 M.R.S. § 62 03 -F (2) (2025) r equire s a seller to gi ve writ ten n oti ce o f a t hir ty - day right to cure a default to a purchaser before foreclosure of a bond - for - deed c ontra ct. H.A.T. asserts that the trial court erred in concl udin g tha t the sta tute d id not a pply in this cas e, and that even if it di d

12 apply, the court erred in fi nding that H.A.T. waived the sta tut e’s p rote ctio ns i n clear and unmistakable language. 6 [¶ 26 ] We interpret this statute de novo. See Doe v. Burnha m, 202 5 ME 33, ¶ 12, 334 A.3d 675. “ If the statute is unambiguous, we will base our interpretation only on t he statute ’s plain language. If the statute is ambiguous, we will consider other indicia of le gislative intent, such as th e statute ’ s purpose or its leg islat ive hist ory. ” Id. (citati on omitte d). [¶ 27 ] The statutory notice provision contains a major limitation, namely that it “ applies only to contracts for the sale of resid ential real estate locate d in this State, when the purchaser is in pos session of the subject real estate. A ll 6 T he t ria l cou rt fo un d that H.A.T. c learly and unmistakably waived the prot ections of s ectio n 6203 - F. Although “[c]ou rts normally will not infer from a general contractual provision that the partie s intende d to waiv e a st atuto rily pr otect ed r ight, ” suc h a w aiver is effe ctive when “th e under takin g is expl icitly st ated. M ore su ccinct ly, the waiver mu st be clear and unmistak able.” Do w v. Bill ing, 2020 ME 10, ¶ 1 7, 224 A.3d 2 44 (emph asi s and quotation marks om itted). Here, H.A.T. ’s “e xpl icitly sta ted” wai ver could not be more “clear and unmistakab le. ” The cont ract provides: (e) Waiver. BY SIGNING HEREUNDER, PURCHASER WAIVES ANY R IG HT IT MAY HAVE TO CONTINUE IN POSSESSION AFTER DEFAULT BY VIRTUE OF TITLE 33 §482 AND/O R TITLE 14 §6203 - F OF THE MAINE REVISED STATUTES AND/OR ANY OTHER PROVISION OF LAW, AND SUBMITS, IN THE EVENT OF ITS DEFAULT HEREUNDER, TO FORCIBLE ENTRY AND DETA INER AS SELLER’S SOLE REMEDY FOR RECOVERING POSSESSION OF THE PROPERTY. Purchaser shall not have any c laim to e quity or i mprovements on the Prop erty. Despite the par ties’ appar ent intention th at they wo uld not be bound by sec tion 6203 -F, t he langua ge of the statute su ggests that t he notice provi sion applie s to all contract s and ma y not be wa ived. S ee 14 M.R.S. § 6203 -F. As a result, we addres s the argument as if th ere was no waiv er.

13 other transactions ar e governed by th e terms of the contract and applicable law. ” 14 M.R.S. § 6203 - F(2)(B) (e mp hasis adde d). [¶ 28 ] H.A.T. a sserts that the p rope rty at is sue is r eside ntial, but the contract between H.A.T. and Greenleaf, as stated in the promis sory note signed by O’Donnel l, w as f or property purchased “only for bus iness purposes, and not for personal, family or household purp oses.” The undated consent judgmen t for forcibl e entry and detainer, sig ned by O’Donnel l, a long wit h the term inat ion agreement, refers to the property in question as a “ commercial property.” This language demonstrates that H.A.T. purchased and regard ed the propert y as a comm ercia l in vestm ent, not as a d we lling in w hich to r eside. [¶ 29 ] W e agr ee with the tr ial cour t’s con clusion t hat 14 M.R.S. § 6203 - F(2)(B) does not ne cessarily apply merely because a property includes residenti al renta l unit s. This st atu t o ry provision was meant to protect homeowners who obtain a mortgage on their residential property, n ot businesses or i ndiv idu al s pursuing mi llion - dollar commercial real estate inves tmen ts. T his con clus ion is s up port ed by t he L egislature’s histor y o f attempting to protect homeo wners in real esta te agreements and in the event of a foreclosure. See P.L. 2 023, c h. 290, § 1 (effective Oct. 25, 2023) (c odified at 32 M.R. S. § 1317 7 -B (2025)) (“ An Act to Protect Homeowne rs from Unfair

14 Agreement s to Excl usive ly L ist Re sid entia l Rea l Es tate for Sale ”); P.L. 2 009, ch. 40 2, §§ 10- 14 (emergency, effe ctiv e June 15, 20 09) (c odified a n d subsequently amended at 14 M.R. S. § 611 1 (1), (1 - A), (3 - A), (3 - B), (4 - A) (2025)) (“ An Act To Preserve Home Ownershi p and Stabilize the Economy by Preventing Unnecessary Foreclosures ”). [¶ 30 ] Sect ion 6203 -F was clearly in tended to protect ho meowners of residential property from f oreclosure withou t the oppo rtun ity to c ure t he default. Preventing the unnecessa ry loss of a mortgagor’s home is a significant and legitimate public purpose. See S incl air v. Sinclair, 654 A.2d 4 38, 4 40 (Me. 1995). This policy interest does not extend to protecting savvy commercial real estate investors who own a property that happens to be us ed for residential purposes. [¶3 1] As a result, 14 M.R.S. § 6203 - F(2)(B) di d not require Greenleaf to give H.A.T. wr itten no tice of its rig ht to cur e the def ault. The ent ry is: Judgment affirmed.

15 James F. Cloutier, E sq. (orally), Cloutier, Conley & D uffet t, P.A., Portland, for appellant H.A.T., LLC Kurt E. Olafsen, Esq., and Meredith C. Eilers, Esq. (oral ly), Olafsen & Eilers. LLC, Portland, for appellee Greenleaf Apar tments, LLC. Russell B. Pierce, Jr., Esq. (oral ly), No rman, Hanson, & DeTroy, LLC., Portl and, for appellee Murray, Plumb & Murray, P.A. Busin ess an d Con sume r Docke t doc ket num ber CV - 2020 - 24 F OR C LERK R EF ERENC E O NLY