USCA1 Opinion

      [NOT FOR PUBLICATION NOT TO BE CITED AS PRECEDENT] 

                 United States Court of Appeals

                     For the First Circuit







No. 99-1486





             BEAL BANK S.S.B., F/K/A BEAL BANC S.A.,



                      Plaintiff, Appellant,



                                v.



                        RICHARD H. KROCK,



                       Defendant, Appellee.







           APPEAL FROM THE UNITED STATES DISTRICT COURT



               FOR THE DISTRICT OF MASSACHUSETTS

                                

         [Hon. Edward F. Harrington, U.S. District Judge]







                              Before



                     Torruella, Chief Judge,

                Lynch and Lipez, Circuit Judges.

                                

                                

                                

  David D. Pavek, Pavek & Associates, William V. Sopp, and

Finnegan, Hickey, Dinsmoor & Johnson on brief for appellant.

  Alan M. Spiro and Edwards & Angell, LLP on brief for

appellee.

                                

                                

                                

                                

                        January 3, 2000

                                

                                

                                

                                  LYNCH, Circuit Judge. Beal Bank sued Richard Krock on a

note with a face amount of $350,000. The district court entered

judgment for Krock, finding Beal Bank had orally modified the note

and that Krock owed nothing. On appeal, this court affirmed the

court's holding that there was an agreed-upon oral modification of

the original contract and remanded for a calculation of the proper

amount owed. See Beal Bank S.S.B. v. Krock, 187 F.3d 621 (1st Cir.

1998) (unpublished table decision). On remand, the district court

recalculated the amount and found again that Krock owed nothing to

the Bank. The Bank appeals.

  The property secured by the note was sold for $1,505,000,

which, according to the oral modification of the agreement, meant

that $403,333.33 would be applied as an offset to Krock's debt. The

Bank's position is that Krock owed $432,020.39 under the note. That

amount is the undisputed note amount of $381,888.88 (the $350,000

principal plus 8% "contract rate" interest), plus 13% "default

rate" interest after Krock's default in paying the November 1, 1994

installment, plus a sum for late charges of 5% due on the past-due

installment and accelerated balance. Accordingly, the Bank says

that, after the offset, Krock still owes it monies.

  Krock argues that because the Bank never gave written

notice of a default or opportunity to cure, as required by the

note, the note was not accelerated nor was default interest rate

triggered. Krock says that the Bank cannot claim default because

the parties orally modified their agreement and the Bank agreed to

take no further action until the sale. Accordingly, Krock says, the

interest rate remained at 8%, not 13%, and no late charge can be

imposed. Krock says that the amount owed under the note at the

contract interest rate was $399,710.43, which is less than the

offset amount. The district court agreed with Krock and, so, found

no money was due.

  Beal Bank erroneously argues it is entitled to de novo

review of the district court's decision. Barring this, it says that

the findings of fact made by the district court are clearly

erroneous. The district court's decision is based on findings of

fact and we review them under a clearly erroneous standard. See

Fleet Nat'l Bank v. H & D Entertainment, Inc., 96 F.3d 532, 540

(1st Cir. 1996).

  The Bank argues there is no notice or opportunity to cure

requirement because the note says that in event of default, the

note becomes immediately payable without notice or demand. The Bank

selectively quotes from the note in making this argument: it does

not quote from the language of the note concerning default, but

rather from the language concerning covenants. The covenant

language, however, is inapt because the default alleged by the Bank

is Krock's failure to make the November 1, 1994 payment, an event

covered by an earlier portion of the agreement.

  Even if notice were required, the Bank says that Krock

had actual notice because Krock's counsel acknowledged, in a letter

of November 10, 1994, that Krock was aware of his default. Because

Krock was so aware, the Bank argues that the purpose, under

Massachusetts law, for having notice requirements -- so individuals

can protect their interests in real property -- was essentially

served here. In any event, Beal Bank says, it was not open to the

district court on remand to determine that there was no default.

  Krock replies that Beal Bank has misled the court by

failing to inform us of two key phrases in the note. Those phrases

are:

    Following the occurrence and continuation beyond the

  applicable cure period of an "Event of Default" as

  defined herein . . . . 



and one of the definitions of "Event of Default": 



    [a failure] to pay any . . . obligation . . . when such

  payment is due, which failure remains uncured after five

  (5) days after written notice thereof . . . .



Thus, Krock says that there was a notice requirement under the

note, that the Bank admits it did not give notice, and that, in any

event, the oral modification meant there was no default and the

Bank was not entitled to accelerate the note balance. An event of

default triggers acceleration, at the holder's option, but both the

note and Massachusetts law require written notice first. See Clark

v. Trumble, 692 N.E.2d 74, 79 (Mass. App. Ct. 1998).

  The trial judge's findings of fact are supported and are

certainly not clearly erroneous. The district court found there was

no event of default because the Bank agreed orally to take no

further action until the property was sold. Even if there had been

an event of default, the note contains a requirement of notice and

the opportunity to cure before the debt could be accelerated. The

Bank does not dispute that it did not give notice or an opportunity

to cure, and so neither the default interest rate nor acceleration

were triggered. Nothing in this court's earlier opinion precluded

the district court from making these determinations.

  We affirm the decision of the district court. 

  Counsel for the Bank are required to show cause within

ten days of the date of this opinion why they should not be

required personally to pay an award to Krock of his attorney's fees

for this appeal and double his costs of appeal because of their

misrepresentation to this court of the pertinent language of the

note. See 28 U.S.C.  1912; Fed. R. App. P. 38; Thomas v. Digital

Equip. Corp., 880 F.2d 1486, 1491 (1st Cir. 1989).