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TBF Financial, LLC v. Gregoire

Supreme Court of Vermont

February 6, 2015

TBF Financial, LLC
Barrett L. Gregoire and Linda P. Gregoire

Motion for Reargument Denied March 19, 2015

Page 512

Editorial Note:

This Opinion is subject to motion for reargument or formal revision before publication. See V.R.A.P. 40

On Appeal from Superior Court, Washington and Caledonia Units, Civil Division. Robert R. Bent, J.

Hans G. Huessy of Murphy Sullivan Kronk, Burlington, for Plaintiff-Appellee.

Christopher J. Smart of Cheney Saudek & Grayck PC, Montpelier, for Defendants-Appellants.

Present: Reiber, C.J., Skoglund and Robinson, JJ., and Morris and Zimmerman, Supr. JJ. (Ret.), Specially Assigned


Page 513


[¶1] Defendants, Barrett and Linda Gregoire, sought to amend or set aside judgments of foreclosure in favor of plaintiff bank based on claims of fraud and misrepresentation.[1] The trial court denied the motions. The bank filed a motion for a finding of default in connection with a post-foreclosure judgment stipulated order. The trial court granted that motion. On appeal, defendants argue that there was no final judgment so the order could be amended without resort to post-judgment proceedings, and even if it was a final order, the court erred in denying their request for relief and in entering judgment of default. We affirm.

[¶2] As the trial court noted, the history of these consolidated cases appealed from Washington and Caledonia Superior Courts is unusual and convoluted.[2] The dispute concerns four multi-family rental properties -- three in Washington County and one in Caledonia County -- that were part of defendants' rental-property business. The bank's loans to defendants were secured by the properties and were cross-collateralized with each other. In March and April 2010, the bank filed foreclosure complaints with respect to the properties. The parties executed a forbearance agreement under which defendants retained control of the properties as landlords, but the tenants were to pay rent directly to the bank.

[¶3] In July 2010, the parties stipulated to the appointment of a receiver to collect rent for the bank. The stipulation was executed by the parties and signed by the court. The stipulation enjoined defendant Barrett Gregoire from interfering with collecting rent, and required the receiver to report monthly to the bank and defendants. It did not expressly require any supervision by or report to the court. In August 2010, the parties stipulated to increase the receiver's reimbursement apparently because the receiver was required to collect rents in-person and was responding to more complaints from tenants about the property than anticipated.

Page 514

[¶4] In October 2010, the receiver filed with the court a report, which stated that defendant Barrett Gregoire was renting to new tenants and collecting rents and security deposits without turning over the funds to the receiver.[3] Shortly thereafter, the bank filed an emergency motion to enforce the receivership order based on allegations that defendant Barrett Gregoire was substantially interfering with the receivership and engaging in unscrupulous conduct. After a hearing, the court issued a supplemental order, expanding the receiver's authority and placing the receiver in full control of the properties.

[¶5] In January 2011, the bank notified the court that the forbearance was no longer in place, and that it would proceed with foreclosure. The bank filed the original stipulation to foreclose executed by defendant Barrett Gregoire on April 23, 2010. Over the next few months the parties signed two stipulations resolving various issues arising from defendant Barrett Gregoire's alleged transgressions in connection with the rental properties, including a stipulation in May 2011 pursuant to which Barrett Gregoire agreed that he would stay 100 feet away from all of the apartment buildings, and that he and his agents would have no contact with current or prospective tenants.

[¶6] On June 27, 2011, the bank submitted an affidavit of amounts due, including the receivership fees. Three days later defendants " conditionally" opposed the bank's final accounting, arguing that the bank had failed to produce all of the underlying documentation. That same day, they filed a motion to enforce a subpoena that defendants had issued to the bank. In the opposition to the bank's accounting, defendants further alleged that the receiver collected excessive fees, noting that the receiver was unusually expensive, traveling monthly from Montana to Vermont for a few days for a fee of $6000 per month in addition to monthly travel expenses of roughly $2000 (which the bank had by that time opted to waive). Defendants argued that the bank had paid out over $90,000 in receivership fees and costs during a time when receivership receipts were not timely applied to real estate taxes and the bank was asserting that receivership income was insufficient to meet expenses. Defendants also claimed that the bank workout loan officer was unqualified to administer the loans, and had been the subject of several successful collection actions, most recently in March 2011 in Montana when a judgment was entered against her on allegations of not paying her rent on a vacation home and removing therefrom personal property belonging to the owner of the home. The bank objected to the subpoena and requested that defendants provide more specific details to support their allegations against the workout officer and receiver.

[¶7] In resolution of these various discovery-related issues, in July the parties agreed that defendants would withdraw all discovery requests, the bank would provide further information to support its accounting and draft foreclosure judgment order, and the parties would return to court on August 15, 2011 for a hearing on any objections to expenditures reflected in the bank's accounting. Defendants were required to file any objections by August 8 so that the bank would be able to bring witnesses. Defendants filed a host of general objections to the bank's accounting, arguing, among other things, that the bank had not produced the required information,

Page 515

and that the bank underreported collected rents.

[¶8] At the August 2011 hearing, defendants' attorney set forth defendants' allegations of misconduct, including claims that substantial receivership funds had been paid to a relative of the bank's loan officer for undocumented accounting and painting services, and that $5000 had been paid from the receivership to a company owned by the bank's loan officer for undefined consulting services. In short, defendants argued that they ...

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