EverHome Mortg. Co. v. Murphy, No. 115-3-10 Bncv (Hayes, J., Dec. 6, 2011)

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                                                    STATE OF VERMONT

SUPERIOR COURT                                                                             CIVIL DIVISION
Bennington Unit                                                                            Docket No. 115-3-10 Bncv

                                                                         │
EverHome Mortgage Company,                                               │
 Plaintiff                                                               │
                                                                         │
 v.                                                                      │
                                                                         │
Robert G. Murphy, Antoinette D. Murphy,                                  │
and Bourn Brook Condominium Assoc.,                                      │
 Defendants                                                              │
                                                                         │


                           DECISION ON MOTION FOR RELIEF FROM JUDGMENT

            On April 6, 2011, Judge Wesley issued a judgment and decree of foreclosure by

judicial sale. On August 11, 2011, Bourn Brook Condominium Association moved for

relief from that judgment order under V.R.C.P. 60(b), arguing that its “super-priority” to

the proceeds from any judicial sale should include all unpaid association fees from the

filing of the foreclosure action until judicial sale. Robert and Antoinette Murphy owed

the Bourn Brook Condominium Association (Association) $9,540.00 in condominium

assessments as of September 30, 2011, dating back to 2005, and the Association seeks

“super-priority” treatment of $2,950 of those fees. The plaintiff objects to this request,

and argues that under 27A V.S.A. § 3-116(c,), the Association is entitled only to unpaid

association fees for “the six months immediately preceding institution of an action to

enforce the lien.”

           The statutory language governing the priority of liens is not ambiguous. It

provides condominium associations a lien for unpaid assessments, and gives such liens
super-priority over pre-recorded first mortgages “during the six months immediately

preceding institution of an action to enforce the lien.” 27A V.S.A. § 3-116(b)(3). For all

other time periods, the general presumption in 27A V.S.A. § 3-116(b)(2) controls, i.e.,

whoever is first in time is first in right. First in time, first in right is not only the general

presumption in § 3-116(b)(2), but it is also the general presumption in all of secured

transaction law. The legislature carved out an exception to that presumption when it

created the six-month super-priority period. Such exceptions to common law

presumptions should be construed narrowly by courts. State v. Deyo, 2006 VT 120 ¶ 16,

181 Vt. 89 (“It is well settled that statutes in derogation of the common law are to be

construed narrowly.”) (citing 3 Sutherland Stat. Const. § 61.01 (5th ed.1992)).

        In support of their positions, the parties have cited to two recent and competing

interpretations of Section 3-116(c) in Superior Court, Civil Division cases. Wells Fargo

Bank v. Schunck et al., No. 193-4-10 Wmcv, slip op. (Vt. Super. Ct. Apr. 28, 2011)

(Wesley, J.); Vermont Housing Finance Authority v. Coffey et al., No. S0367-11 CnC, slip

op. (Vt. Super. Ct. Aug. 11, 2011) (Toor, J.).

        The Schunk opinion notes that “the statutory scheme strikes a careful balance

between the secured positions of the first mortgage holder and the condominium

associations,” and that a literal interpretation of the statute “leads to such unjust results

as to require that it be rejected as yielding absurd consequences.” 193-4-10 Wmcv at 2.

In Schunk, the court also focuses on the reality that the foreclosure process in Vermont

– and indeed in the country – has tended to take much longer in recent years than it

ever has in the past. This fact means that condominium associations are often left in


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the same position as other secondary creditors with respect to fees that accrue during

the pendency of actions. Therefore, the court in that case held that “all unpaid

assessments which continue to accrue while the action is pending should be paid first

from the proceeds of any sale.” Id. at 1.

       In the Coffey decision, the court concluded that “[t]he plain language of the

statute is clear and controls this issue.” No. S0367-11 CnC, at 4. It held that “it would

be presumptuous to introduce new policy considerations to the mix that could add

significant additional assessments to the secured lenders’ tab.” Id. at 5.

       This court concludes that the Coffey decision is the better reasoned and more

persuasive argument. The language of the statute is clear, and must be enforced. It is

therefore ordered that Bourn Brook is entitled to a super-priority lien over EverHome

only for the assessments that accrued between October 25, 2009 and March 25, 2010

when the complaint was filed.

       The plaintiff is invited to submit an amended final judgment order that conforms

to this opinion within two weeks of this decision.


       Dated at Bennington, this 6th day of December, 2011.




                                             _____                             _
                                             Katherine A. Hayes
                                             Superior Judge




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