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State Farm Fire & Casualty Co. v. Habibzai

United States District Court, D. Maine

August 22, 2017

WASI HABIBZAI, Defendants.



         Before the Court is the Motion for Summary Judgment (ECF No. 44) filed by Defendants and Counterclaim Plaintiffs Wasi Habibzai and Manija Habibzai (together, “Defendants” or “Habibzais”). For reasons explained herein, the Court GRANTS IN PART and DENIES IN PART the Motion.


         Generally, a party is entitled to summary judgment if, on the record before the Court, it appears “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). An issue is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. A “material fact” is one that has “the potential to affect the outcome of the suit under the applicable law.” Nereida-Gonzalez v. Tirado-Delgado, 990 F.2d 701, 703 (1st Cir. 1993).

         The party moving for summary judgment must demonstrate an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In determining whether this burden is met, the Court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor. Santoni v. Potter, 369 F.3d 594, 598 (1st Cir. 2004). Once the moving party has made this preliminary showing, the nonmoving party must “produce specific facts, in suitable evidentiary form, to establish the presence of a trialworthy issue.” Triangle Trading Co., Inc. v. Robroy Indus., Inc., 200 F.3d 1, 2 (1st Cir. 1999) (quotation marks and punctuation omitted); see also Fed.R.Civ.P. 56(e). “Mere allegations, or conjecture unsupported in the record, are insufficient.” Barros-Villahermosa v. United States, 642 F.3d 56, 58 (1st Cir. 2011) (quoting Rivera-Marcano v. Normeat Royal Dane Quality A/S, 998 F.2d 34, 37 (1st Cir. 1993)); see also Wilson v. Moulison N. Corp., 639 F.3d 1, 6 (1st Cir. 2011) (“A properly supported summary judgment motion cannot be defeated by conclusory allegations, improbable inferences, periphrastic circumlocutions, or rank speculation.”). “As to any essential factual element of its claim on which the nonmovant would bear the burden of proof at trial, its failure to come forward with sufficient evidence to generate a trialworthy issue warrants summary judgment for the moving party.” In re Ralar Distribs., Inc., 4 F.3d 62, 67 (1st Cir. 1993). Ultimately, summary judgment does not require “an all-or-nothing approach” and the Court may grant partial summary judgment on only certain claims or even part of a claim. Wright & Miller, 10B Federal Practice & Procedure § 2737 (4th ed. 2016); see also Fed.R.Civ.P. 56(g).

         District of Maine Local Rule 56 prescribes a detailed process by which the parties are to place before the Court the “material facts . . . as to which the moving party contends there is no genuine issue.” D. Me. Loc. R. 56(b). The Local Rule further requires each statement of material fact to be followed by a “record citation[ ] . . . to the specific page or paragraph of identified record material supporting the assertion.” D. Me. Loc. R. 56(f). Ultimately, in constructing the narrative of undisputed facts for purposes of summary judgment, the Court deems any statement with a supporting record citation admitted but “may disregard any statement of fact not supported by a specific citation to record material properly considered on summary judgment.” D. Me. Loc. R. 56(f); see also Fed.R.Civ.P. 56(e)(2) (“If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion[.]”).


         On June 23, 2015, a house located at 17 Garett Avenue in Gray, Maine (the “Gray Property”)[2] burned to the ground. Initial construction of this house began with the issuance of a building permit for construction of a new home in May 2002. The initial construction ran into some problems and the property thereafter became a bank-owned property. Michael Beaulieur a/k/a Beaulieu (“Beaulieu”), [3] a general contractor and real estate investor, heard about the property from a realtor and decided to purchase the property as an investment in 2003.[4] On October 10, 2003, Beaulieu paid York Federal Credit Union $150, 000 to purchase the partially constructed Gray Property.[5]

         At the time of Beaulieu's purchase, the Gray Property was framed, enclosed in plywood, but missing windows, doors, and waterproofing. Between 2003 and 2004, Beaulieu installed windows, doors, a deck, and exterior “Tyvek” waterproofing. In a letter dated February 5, 2004, the Town Code Enforcement Officer informed Beaulieu the original building permit had lapsed and that he was issuing a Stop Work Order on the Gray Property. (ECF No. 52-3 at PageID # 822.) The Stop Work Order noted “structural problems” with the house and indicated an engineer review would be necessary before another building permit could issue. (Id.) Thereafter, the property sat untouched for approximately eight years.

         Beaulieu's Mortgage on the Gray Property

         Beaulieu financed his purchase of the Gray Property as well as the planned additional construction with a $295, 000 loan from Downeast Mortgage Corporation (“Downeast Mortgage”).[6] Downeast Mortgage was co-owned by Jim Lindvall (“Jim” or “Lindvall”), a mortgage lender and a real estate investor. In 2007 or 2008, Jim Lindvall incorporated Market Trading Company, LLC (“Market Trading”), a sole-member limited liability company, to purchase three mortgages from Downeast Mortgage; one of those mortgages was for the Gray Property. As a result, Market Trading then became the mortgage holder for the Gray Property. While there is no documentation that Beaulieu ever paid off the mortgage on the Gray Property, Beaulieu maintains that by July 2012, he owed Lindvall nothing on the Gray Property.

         The Habibzais & Their Efforts to Buy a Home

         Defendants Wasi Habibzai (“Wasi”)[7] and his wife, Manija Habibzai (“Manija”) have lived in Maine since immigrating to the United States from Afghanistan in 1990. They have been married for approximately seventeen years and have three sons. Manija speaks English as a second language; for Wasi, English is a third language.[8] Together, they have operated a used car business known as Silver Motors for more than ten years.[9] The Habibzais are Muslim. In accordance with their religious practice, the Habibzais do not charge interest or incur interest charges. As a result, they generally do not use credit cards[10] and conduct much of their business in cash. However, they also use debit cards and maintain bank accounts.

         Sometime in the early 2000s, Wasi was introduced to Beaulieu by Beaulieu's brother. Beaulieu, in turn, introduced Wasi to Lindvall in 2008. This introduction was made in connection with Wasi negotiating to buy a property in Buxton, Maine, that was then an investment jointly held by Beaulieu and Lindvall. Wasi made a $5, 000 cash deposit towards the purchase of this Buxton property. He then discovered some issues with the property and sought the return of his deposit. According to Wasi, Lindvall and Beaulieu “screw[ed]” him by refusing to give him back his deposit for about four years. (W. Habibzai 9/2/15 Dep. (ECF No. 53) at PageID # 851.)

         Instead of returning the deposit, Lindvall eventually offered to sell Wasi the Gray Property by sometime in 2012 or 2013. Contemporaneous documentation of this agreement is lacking.[11]However, the deposition testimony of the Habizais and Michael Beaulieu, both establish an agreement between Wasi, Beaulieu, and Lindvall to sell the Gray Property to the Habibzais.[12]

         The Habibzais recommenced construction on the Gray Property shortly after reaching an agreement to buy it. Working alongside family and friends, [13] the Habibzais completed additional construction.[14] (R. 281-86; 337; 384-401.)[15] Wasi also obtained an electrical permit in October 2013 and established electrical service for the Gray Property in his own name. (R. 337 & 340-42.) However, prior to the fire on June 23, 2015, the Habibzais did not obtain any building permit or certificate of occupancy for the Gray Property.

         Pursuant to the terms of their agreement, Wasi made monthly cash payments to Lindvall toward the purchase of the Gray Property.[16] These payments varied in amount. According to Wasi, the payments ranged from at least $800 to approximately $9, 000 each and all of the necessary payments to Lindvall (totaling over $80, 000) were made before September 19, 2014.[17]Ultimately, the earliest documentation of the transfer of the Gray Property from Beaulieu to Wasi is a quitclaim deed dated March 17, 2015.[18] (R. 403-04.) This quitclaim deed was recorded on April 13, 2015.

         Insurance Coverage on the Gray Property

         After making the necessary payments to purchase the Gray Property, the Habibzais acquired a homeowner's insurance policy on the Gray Property from State Farm Fire and Casualty Company (“Plaintiff” or “State Farm”) through John Couture Insurance Agency on September 19, 2014 (hereinafter, “the Policy”). The Policy provided a dwelling coverage limit of $397, 200 and an additional personal property coverage limit of $297, 900. The Habibzais made their first premium payment to State Farm on the day they acquired the Policy. They continued to make timely payments during all relevant times thereafter. The Habibzais' premium payments were made in cash.

         The Passing of Jim Lindvall

         Lindvall passed away suddenly on October 25, 2014. Shortly before his death, Lindvall had a one-car accident with his personal vehicle on his own property. He called Wasi for assistance. According to Wasi, he had Lindvall's Cadillac towed to Silver Motors for repair and gave Lindvall his Volvo as a loaner. The Volvo contained some of Wasi's personal papers, including papers related to the Gray Property. According to Wasi, those papers were no longer with the vehicle once it was returned following Jim's death. Wasi also had a monetary dispute with Lindvall's heirs immediately following his death about other vehicles, including two Cadillacs that were located at Silver Motors.

         Lindvall left behind three grown children, including his daughter, Abigail Lindvall (“Abigail”). Abigail graduated from law school in 2013, and practiced law for a brief period of time in Massachusetts. She was appointed Personal Representative for her father's estate on December 15, 2014. Abigail left her in-house counsel position in order to work on the Lindvall's Estate, including winding-up Jim's various business enterprises, which consisted of at least eight businesses he had operated or co-operated in between 2010 and 2014.

         Abigail has acknowledged that her father “was not a wonderful record keeper.” (R. 29.) Nonetheless, as the Personal Representative of Lindvall's Estate and the acting principal of Market Trading, she searched all of her father's available personal and business records and found no documents to suggest that there was ever an agreement to sell the Gray Property to the Habibzais. Likewise, she found no indications in her father's personal and business records that Lindvall had any deal or agreement with Beaulieu with regard to the Gray Property or a swap of that property. She similarly found no evidence in her father's personal or business records of any payments made by the Habibzais toward the purchase of the Gray Property. Rather, the documentation she found suggested that Market Trading still held a mortgage on the Property as security for the $295, 000 loan to Beaulieu.

         Market Trading's Foreclosure on the Gray Property

         On May 11, 2015, Abigail Lindvall, as acting principal of Market Trading, filed a foreclosure complaint in Cumberland County Superior Court to foreclose on the mortgage on the Gray Property (hereinafter, “the Initial Foreclosure Complaint”). (R. 307-316.) Prior to filing the Initial Foreclosure Complaint, Abigail Lindvall had reviewed all of the records she could find with regard to her father's personal business and the business of Market Trading. She found no evidence that any payments had been made to satisfy Mr. Beaulieu's $295, 000 obligation secured by the mortgage. As a result, the Initial Foreclosure Complaint named Beaulieu as the defendant and eight persons or entities as parties-in-interest based upon liens of record. Beaulieu was “very surprised” to be named as the defendant in the Gray Property foreclosure because he believed at that point that Wasi “own[ed] the house.” (R. 16.) The Habibzais were not included as defendants or parties-in-interest in the Initial Foreclosure Complaint. At the time Abigail filed the initial complaint, she did not believe the Habibzais had any interest in the Gray Property.

         On or about May 29, 2015, Market Trading filed an amended foreclosure complaint in Cumberland County Superior Court regarding the Gray Property (hereinafter “the Amended Foreclosure Complaint”). (R. 317-327.) Among the changes in the Amended Foreclosure Complaint was the addition of Wasi as a party-in-interest. The change to add Wasi as a party-in-interest to the Amended Foreclosure Complaint was prompted by a registry search performed by Abigail after an incident on the Property.[19] However, Abigail still had seen no records that suggested that her father had made any commitment to the Habibzais concerning the Gray Property. (R. 40.) According to the Amended Foreclosure Complaint, the total due on the note secured by the Market Trading mortgage on the Gray Property as of March 31, 2015, was $500, 490.19, with further amounts accruing at a per diem rate of $65.12. Wasi was served with the Amended Foreclosure Complaint about twenty days before the fire occurred at the Gray Property. Ultimately, this foreclosure action was resolved via a settlement agreement between Market Trading and the Habibzais on December 1, 2015. (R. 114-18.)

         The Real Estate Tax Lien ...

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