The United States District Court for the District of New Hampshire has ruled in favor of WPB Partners, LLC, in a case brought by Mary Hersey. The court granted summary judgment to WPB Partners on both Hersey’s claim of usury and WPB Partners’ counterclaim for breach of contract. This means Hersey lost her case and was ordered to pay damages on the loan.
The Heart of the Dispute
The case revolved around a promissory note and mortgage held by WPB Partners on Hersey’s undeveloped real estate. Hersey claimed WPB Partners violated Massachusetts’ usury law by charging an excessive interest rate. WPB Partners, in turn, sued Hersey for breach of contract, arguing she failed to make payments on the promissory note.
Usury Claim Fails Due to Proper Notification
Hersey’s primary argument centered on the claim that WPB Partners charged an interest rate exceeding the legal limit under Massachusetts law. However, the court found that WPB Partners had taken the necessary steps to avoid violating this law.
The court noted that WPB Partners had filed a timely notice with the Massachusetts Attorney General’s office, indicating its intention to make loans with interest rates above the statutory cap. Under Massachusetts law, such notification acts as a defense against a usury claim. This notification process essentially allows lenders to operate under different interest rate rules if they inform the state.
The court specifically rejected Hersey’s arguments that the notice was deficient. It clarified that WPB Partners did *not* need to file a separate notice for Hersey’s specific loan. The court also found that the notice was valid even though it stated the intention to make commercial loans, while Hersey’s loan was technically for real estate development. The court determined that Hersey’s loan was, in essence, a business loan.
Breach of Contract Counterclaim Wins
WPB Partners also filed a counterclaim against Hersey for breach of contract, stemming from her failure to make payments on the promissory note. Hersey’s primary defense against this claim was the “unclean hands” doctrine. This legal concept suggests that a party cannot seek legal relief if they have acted unethically or in bad faith.
The court rejected Hersey’s “unclean hands” argument for two key reasons. First, WPB Partners sought a legal remedy in the form of liquidated damages. The “unclean hands” doctrine, however, generally only applies to equitable relief, not claims for damages. Second, the court determined that Hersey failed to provide sufficient evidence to demonstrate that WPB Partners’ conduct was egregious enough to warrant the application of the “unclean hands” doctrine.
Liquidated Damages Agreed Upon
During a pretrial conference, the court discussed the calculation of liquidated damages. Both parties agreed that the amount of $443,443.03, as of September 6, 2011, would be appropriate. This amount was favorable to Hersey and was based in large part on her own expert’s opinion. The court noted that WPB Partners pragmatically recognized the property’s value was less than the judgment amount, and further calculations would not serve a useful purpose.
The Ruling
The court granted WPB Partners’ motions for summary judgment, effectively ending the case in their favor. Judgment was entered in favor of WPB Partners on Hersey’s usury claim and on WPB Partners’ counterclaim for breach of contract. The court awarded liquidated damages in the agreed-upon amount of $433,433.03.