Rok Builders, LLC v. 2010-1 SFG Venture LLC (In Re Moultonborough Hotel Group, LLC)
498 F.3d 1
| 1st Cir. | 2013Background
- ROK Builders contracted in 2006 (and recontracted in 2007) to build a Hampton Inn in Tilton, NH; work paused for nonpayment and later resumed after financing by Specialty Finance Group (Specialty).
- Specialty executed and recorded a construction mortgage on the hotel and paid ROK more than $6.43 million over the life of the 2007 contract, including a written lien waiver by ROK acknowledging prior payments and waiving liens through May 31, 2008.
- ROK alleges it remains owed about $2.49 million for later work (including June work and retainage) and filed a mechanic's lien on the property.
- Specialty later failed; its mortgage was assigned to SFG (appellee). Moultonborough filed Chapter 11; SFG sought a declaration that the mortgage is senior to ROK's lien to the extent Specialty disbursed funds to ROK.
- Bankruptcy and district courts ruled for SFG; ROK appealed, challenging (1) seniority of the mortgage vs. mechanics' lien and (2) dismissal of counterclaims for implied contract, promissory estoppel, and unjust enrichment.
Issues
| Issue | Plaintiff's Argument (ROK) | Defendant's Argument (SFG) | Held |
|---|---|---|---|
| Priority: Is SFG's recorded mortgage senior to ROK's mechanic's lien to the extent Specialty paid ROK? | ROK: Because ROK began work before the mortgage was recorded, its lien for later unpaid work remains senior to the mortgage. | SFG: New Hampshire law gives a mortgage recorded without notice priority; §447:12-a makes mechanics' liens subordinate to the mortgage to the extent mortgage proceeds paid the mechanic. | Held for SFG: Mortgage is senior to ROK's lien to the extent of $6,434,074.40 paid to ROK by Specialty; §447:12-a applies. |
| Assumption of liability: Can SFG be liable for implied contract or promissory estoppel claims based on Specialty's conduct? | ROK: By accepting assignment of the mortgage/loan, SFG implicitly assumed Specialty's liabilities under Restatement §328. | SFG: The assignment transferred lender rights, not implied obligations to third-party contractors; no evidence SFG assumed Specialty's separate obligations. | Held for SFG: No basis to bind SFG to alleged implied contract or promissory estoppel promises made by Specialty. |
| Unjust enrichment: Can ROK recover restitution from SFG for benefit conferred by unpaid work? | ROK: Specialty was unjustly enriched by work; SFG, as successor to the mortgage, must disgorge benefit. | SFG: SFG purchased the mortgage at arm's length and did not unfairly benefit; no unconscionable retention alleged. | Held for SFG: ROK failed to allege facts showing SFG received a benefit whose retention would be unconscionable; unjust enrichment dismissed. |
Key Cases Cited
- Amoskeag Bank v. Chagnon, 572 A.2d 1153 (N.H. 1990) (New Hampshire is a race-notice jurisdiction for recording interests)
- Mansur v. Muskopf, 977 A.2d 1041 (N.H. 2009) (confirms race-notice rule and recording requirements)
- Lewis v. Shawmut Bank, 650 A.2d 744 (N.H. 1994) (describes §447:12-a as an exception to race-notice)
- Nute v. Blaisdell, 374 A.2d 923 (N.H. 1977) (example of unjust enrichment where recipient received property without payment)
- Gen. Insulation Co. v. Eckman Constr., 992 A.2d 613 (N.H. 2010) (restitution may be required even if recipient did not engage in wrongful acts)