Harbor Funding Corp. V. Kavanagh
Maine Supreme Judicial Court
666 A.2d 498 (1995)
Harbor Funding, Corp. (Harbor) (plaintiff), a Massachusetts corporation, loaned Litchfield Square Associates (LSA), a general partnership, funds to purchase property in Maine. James Kavanagh (defendant), an LSA partner, signed a note evidencing the loan both as a general partner and as an individual guarantor. The note was then secured by a mortgage on the Maine property, which was also signed by Kavanagh as a general partner of LSA. All loan documents were signed in Massachusetts. The mortgage included a choice-of-law clause designating Massachusetts law to govern the mortgage and all its provisions. Sometime during the loan, the parties agreed to an allonge and loan-modification agreement, but the choice-of-law provision remained unchanged. The allonge discharged all the makers and co-makers from the obligation on the note—except for Kavanagh. Thereafter, Harbor initiated a foreclosure action in state court in Maine. Kavanagh argued that according to the parties’ choice-of-law clause in the mortgage, Massachusetts law should govern the foreclosure. The court granted summary judgment for Harbor and ordered foreclosure of the mortgage in accord with Maine law. Kavanagh appealed.
Rule of Law
Holding and Reasoning (Wathen, C.J.)
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